How Have Silver Mining Stocks Fared in 1Q16?


Mar. 24 2016, Published 9:23 a.m. ET

Best target price

Safe-haven demand has lifted gold and silver prices substantially since the beginning of 2016. The rise of these metals has helped mining-based companies, which faced carnage in 2015. During the last few weeks, silver has outperformed gold. Silver has risen 2.3% over the past month, while gold has risen only 0.82%.

Silver mining companies First Majestic Silver (AG), Silver Wheaton (SLW), Pan American Silver (PAAS), and Coeur Mining (CDE) have seen surging returns over the past couple of months. These four stocks have risen 107.6%, 44%, 67.1%, and 33.9%, respectively, on a year-to-date basis.

The current price of Silver Wheaton Corp., $17.89, remains considerably lower than its best target price of $20.44 per share. First Majestic Silver, Pan American and Coeur Mining have lower target prices than their current trading prices. This suggests a possible fall for these stocks.

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Technical indicators

First Majestic Silver, Silver Wheaton, and Coeur Mining all have RSI (relative strength index) readings above 70. However, Pan American Silver has an RSI reading of 66. A level above 70 indicates a stock is overbought and may see a downward revision. The RSI reading for the VanEck Vectors Gold Miners ETF (GDX) is also below 70.

AG, SLW, PAAS, and CDE are trading at premiums of 82.5%, 31.5%, 40.8%, and 96.6%, respectively, to their 100-day moving averages. GDX is also trading at a premium of 31.9% to its 100-day moving average. All these stocks are also trading at considerable premiums to their 20-day moving averages.

These gains confirm the ongoing bullish trend in the mining sector. The four companies listed above make up a combined 7.7% of GDX.


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