Precious Metal Mining Stocks: October Technicals
Before investors park their money in mining stocks, there are a few key indicators they should consider. Let’s look at call implied volatility and RSI (relative strength index) scores for Royal Gold (RGLD), Silver Wheaton (SLW), Buenaventura (BVN), and Kinross Gold (KGC).
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Call-implied volatility is used to read the price fluctuations of a stock’s call option. As of October 31, 2017, RGLD, SLW, BVN, and KGC had call-implied volatility of 22.2%, 58.4%, 51.5%, and 26.6%, respectively. Mining stocks can often be more volatile than their related precious metals.
RSI scores are used to assess whether a stock is overpriced or underpriced. If a stock’s RSI score is higher than 70, it may be overbought, and its price may fall. If a stock’s RSI score is below 30, it could be oversold, and its price may rise.
RGLD, SLW, BVN, and KGC have RSI scores of 85.2, 19.8, 12.7, and 4.2, respectively. The recent drop in these stocks’ prices has led to a considerable fall in their RSI scores. Low RSI numbers imply that a price revival may be just around the corner. On a 30-day-trailing basis, the VanEck Merk Gold Trust ETF (OUNZ) and VanEck Vectors Junior Gold Miners ETF (GDXJ) have fallen 0.79% and 4.8%, respectively, due to the slump in precious metal prices.