uploads///miner

Why Miners Have Outshined Precious Metals

By

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

Miners are happy about gold gains

Mining stocks are often known to amplify the returns in precious metals. Small losses for metals can bring exponential losses to metal miners, and vice versa. Gold and silver rose significantly due to the haven bids. Mining shares also took a breather and overcame their 2015 massive losses.

Let’s look now at the performance of a few crucial gold and silver miners year-to-date. First Majestic Silver (AG), New Gold (NGD), Coeur Mining (CDE), and Iamgold (IAG) have risen 202.1%, 95.7%, 201.1%, and 153.5%, respectively, on a YTD (year-to-date) basis.

On the ETF front, the VanEck Vectors Gold Miners ETF (GDX) has risen 77.8% YTD. Due to the sudden and massive surge in the price of most mining shares, the target prices of all these miners, except Coeur Mining, are below their current trading prices. That suggests a negative outlook.

Article continues below advertisement

Technical indicators

First Majestic Silver, New Gold, Coeur Mining, and Iamgold are trading at premiums of 81.6%, 38.8%, 72.9%, and 66.7%, respectively, to their 100-day moving averages. GDX is also trading at a premium of 32.7% to its 100-day moving average. These miners’ prices are also significantly above their 20-day moving averages. But remember, great premiums over long- and short-term averages suggest a possible pullback.

The RSI (relative strength index) readings for these miners are 57–66. An RSI level above 70 indicates that a stock has been overbought and might see a downward revision. A level below 30 indicates that a stock has been oversold and might see an upward revision. GDX’s RSI is around 57.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.