uploads///Platinum and Palladium Prices

Precious Metals Rout Impacts the Mining Industry

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Nov. 26 2015, Updated 4:29 p.m. ET

Platinum and palladium

Palladium has risen successively in the current week. It has a five-day-trailing gain of 3.5%, outperforming its three precious metals counterparts. Palladium closed at $552 per ounce on Wednesday, November 25, 2015, gaining 1.8% from its previous close.

Platinum also gained 0.26%, settling at $844 per ounce, which was marginally above the lowest price that it had recently touched.

Above is a comparative price chart for the prices of platinum and palladium. A steep fall in prices has been witnessed in the month November as the precious metals have retreated due to rate hike fears.

Even silver prices have fallen, touching $14.14 per ounce, which is marginally higher than the six-year low of $13.86 seen on Monday, November 23, 2015.

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Mining industry affected

It seems that the routing prices of precious metals have extended their losses to the ETFs based in mining. The Sprott Gold Miners ETF (SGDM) has lost 13.9% on a 30-day-trailing basis. Similarly, the Global X Silver Miners ETF (SIL) has lost 13.4%. Mining companies Kinross Gold (KGC), IAMGOLD (IAG), and Eldorado Gold (EGO) have lost 15%, 22.1%, and 21.4%, respectively, in the past 30 trading days.

Together, these three companies determine about 8% of the price changes in the VanEck Vectors Gold Miners ETF (GDX). GDX itself has fallen about 14.4% during the past month.

The above-mentioned three companies are trading at a ~9% discount to their 100-day moving average prices. Their RSIs (Relative Strength Index) are each trading close to 40, indicating that a reversal in prices may be expected. An RSI measures the comparative undervaluation or overvaluation of an asset.

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