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How Global Indicators Are Affecting Precious Metals

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Part 4
How Global Indicators Are Affecting Precious Metals PART 4 OF 4

Miners’ Relative Strength Index Rebounds in October 2017

Mining stocks

Most precious metals saw a down day on Tuesday, October 10, despite the upward movement in precious metals. Though the metals and miners move together most of the time, they may diverge on certain days due to stock-specific or market-specific reasons.

We’ll take a brief look at the volatility figures and RSI (relative strength index) levels of Franco-Nevada (FNV), Randgold Resources (GOLD), Yamana Gold (AUY), and Pan American Silver (PAAS) in this article.

Miners&#8217; Relative Strength Index Rebounds in October 2017

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Volatility of miners

Call implied volatility is used to read the variations in the price of a stock with respect to changes in the price of its call option. On October 10, 2017, Franco-Nevada, Randgold, Yamana, and Pan American had implied volatilities of 25.5%, 25%, 48.4%, and 34%, respectively. We should remember that the volatilities of mining stocks are usually higher than the volatilities of precious metals.

RSI level

An RSI (relative strength index) helps us analyze whether a stock is overbought or oversold. If a stock’s RSI is greater than 70, it could be overbought, and the price could fall. If a stock’s RSI is less than 30, it could be oversold, and the price might rise.

The RSI levels of Franco-Nevada, Randgold, Yamana, and Pan American are 50.5, 49.1, 45.9, and 51.1, respectively. The recent rebound in their stock prices have led to a rise in their RSI levels.

We’ll also look at the mining funds such as the Sprott Gold Miners (SGDM) and the iShares MSCI Global Gold Miners (RING). They also track the price changes in the precious metals and have seen year-to-date rises of 12% each.

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