Analyzing the Performance of Base Metal and Pure Gold Miners



Precious versus base metals

We have already discussed precious metals mining companies, so now we’ll compare the base metal miners to gold miners. The gold mining companies have suffered a great deal as a result of the fall in precious metals. Similarly, base metal miners have also struggled this year. Copper, aluminium, and zinc have dropped 18.3%, 31.3%, and 22.5%, respectively. Gold and silver have declined 10.1% and 10.7%, respectively.

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The fall in metal prices affected base metal miners like Rio Tinto (RIO), BHP Bilton (BHP), and Southern Copper (SCCO). These three diversified miners have fallen 37.1%, 44%, and 8.8%, respectively, on a year-to-date basis. Gold mining companies Gold Fields (GFI), IamGold (IAG), and AngloGold Ashanti (AU) have fallen 37%, 46%, and 18.4%, respectively, on a year-to-date basis.

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100-day moving average price

These gold and the base metal miners have a thing in common, which is that most of the miners’ 100-day moving average prices are significantly above their current trading price.

Rio Tinto (RIO), BHP Billiton (BHP), and Southern Copper (SCCO) are trading at an 18.6%, 24.5%, and 5.2% discount, respectively, from their 100-day moving average price. Significantly higher 100-day moving prices may imply a possible reversion upward in the rates.

IamGold (IAG) and AngloGold Ashanti (AU) are trading at a 12.5% and 5.6% discount, respectively, from their 100-day moving average price. The comparative price performance of pure gold miners seems to be better than that of the mixed metal miners.

The RSI (relative strength index) for the base metal miners is also trading close to the 30 mark, which is considered a benchmark from where prices can be revised upwards. Comparatively, the gold miners are in a better position having an RSI level between 50 and 60. IAG and AU make up 5.4% of the VanEck Vectors Gold Miners ETF (GDX).


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