Candian miners performance
April 2016 has brought some disappointment to precious metals miners after huge gains in 1Q16. Usually, precious metals miners follow returns in precious metals.
The overall performance of gold in 1Q16 was remarkably positive, as gold claimed its highest quarterly returns in almost three decades. Silver outperformed gold during the past month, rising by a whopping 13.7% compared to gold’s 1.8% rise.
The initial gains in precious metals helped mining companies to recover the losses they experienced in 2015. Let’s look at the performances of major gold and silver miners from Canada so far in 2016.
Gold and silver miners New Gold (NGD), Agnico-Eagle Mines (AEM), Silver Wheaton (SLW), and IAMGOLD (IAG) have risen 87.1%, 57.3%, 48.1%, and 107.8%, respectively, on a year-to-date basis. The most crucial contributors to the miners’ rally in 2016 have been haven bids.
Even the VanEck Vectors Gold Miners ETF (GDX) has risen by a whopping 64.7% year-to-date. With such a sudden surge in metals and miners, current prices for Silver Wheaton are considerably higher than its respective best target price, suggesting a possible pullback.
Silver markets are doing comparatively better than gold markets for now. New Gold is much closer to its target price.
NGD, AEM, SLW, and IAG are trading at premiums of 43.7%, 27.1%, 26.4%, and 51.3%, respectively, to their 100-day moving averages. GDX is also trading at a premium of 31.5% to its 100-day moving average. These miners’ prices are also significantly above their 20-day moving averages.
The RSI (relative strength index) readings for all these miners are around the 60 level. A level of above 70 indicates that a stock has been overbought and may see a downward revision. A level of below 30 indicates that a stock has been oversold and may see an upward revision. GDX’s RSI is 59.4.