Reduced  precious metals volatility

The volatility in gold decreased as gold slipped for yet another day on Wednesday, July 20, 2016. Gold futures for August expiration declined 0.9% and closed at $1,319.30 per ounce. The call implied volatility, which measures changes in the price of gold’s call option with respect to changes in price, was at 14% on Wednesday. That’s much lower than 20% during the days of the Brexit vote.

Silver and platinum also followed the changes in gold and fell. They closed at $19.60 and $1,091.50 per ounce, respectively, on Wednesday. Palladium, however, rose 2.9% and closed at $676 per ounce. It seems that palladium is closely following trends in the overall Market, particularly equity markets. Palladium has a greater industrial use, so it may more closely associate with industrial sentiment than with the sentiment for precious metals.

Front Month Silver Futures 3-Month Price Evolution 2016-07-22

Moving averages

Above is a three-month graph for silver. It shows a considerable surge due to the Brexit vote and the Market unrest that followed. However, haven bids for silver seem to be declining.

Despite silver’s price decline, it’s still trading at a premium of 15.2% to its 100-day moving average. Gold is at a 3.9% premium to its 100-day moving average.

Leveraged funds and miners

Leveraged mining funds such as the Direxion Daily Gold Miners Bull 3X ETF (NUGT) and the ProShares Ultra Silver (AGQ) have risen 37.1% and 30.4%, respectively, over the past month.

Mining shares such as Harmony Gold Mining (HMY), Iamgold (IAG), and Buenaventura Mining (BVN) rose 24.4%, 19.9%, and 18.5%, respectively, on a 30-day trailing basis. Combined, these three miners make up about 6% of the changes in the VanEck Vectors Gold Miners ETF (GDX).