What Does Giant Miners’ Performance Indicate?


Dec. 4 2020, Updated 10:53 a.m. ET

Giant miners’ performance check

For mining companies, 2016 brought a ray of hope. They suffered carnage in 2015. Gold had the best quarterly performance in 30 years and silver climbed to its 11-month high. Such tremendous growth in precious metal prices lifted mining companies. Let’s look at the performance of the giant mining companies, so far, in 2016.

Precious metal miners Royal Gold (RGLD), GoldCorp (GG), Newmont Mining (NEM), and Barrick Gold (ABX) rose by 57.9%, 52%, 78.9%, and 121.4%, respectively. The most crucial contribution to the rally in miners in 2016 has been safe-haven bids.

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Even the VanEck Vectors Gold Miners ETF (GDX) rose 69.5% on a year-to-date basis. However, with such a sudden surge in metals and miners, the current prices for Royal Gold, Newmont Mining, and Barrick Gold remain higher than their respective best target prices. This suggests a possible pullback in prices. GoldCorp has its current price trading very closely to its target range.

Technical indicators

Royal Gold, GoldCorp, Newmont Mining, and Barrick Gold are trading at premiums of 37.9%, 27.0%, 40.4%, and 46.0%, respectively, to their 100-day moving averages. GDX is also trading at a premium of 36% to its 100-day moving average. The price of these miners is also significantly above their 20-day moving averages. Such large premiums can point towards a possible downturn in price.

The RSI (relative strength index) readings for all of these giant miners are 60–69. A level above 70 indicates that a stock is overbought and might see a downward revision. A level below 30 indicates that a stock is oversold and might see an upward revision. GDX’s RSI is at 65.


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