Miners mixed reaction
Like precious metals, mining shares have also been slowly falling. On average, miners follow gold’s price direction almost 50% of the time. Most mining companies reversed their 2015 losses during the first few months of 2016 and posted substantial gains.
The correlation between mining stocks and precious metals remains high. Mining shares had a mixed reaction on Tuesday, August 16, despite the rise in the precious metals. Sibanye Gold (SBGL) and Agnico Eagle Mines (AEM) rose 0.74% and 0.06%, respectively. However, Gold Fields (GFI) and Primero Mining (PPP) fell 0.47% and 1.1%, respectively.
SBGL, AEM, and GFI have seen tremendous YTD (year-to-date) gains. They’ve risen 234.2%, 128.2%, and 121.3%, respectively, YTD. However, Primero Mining has fallen 20.6% YTD. The safe-haven bids were the most important factors behind the increases in gold and gold mining companies.
The VanEck Vectors Junior Gold Miners ETF (GDXJ) has posted a YTD gain of 167.1%.
Sibanye Gold, Gold Fields, and Agnico Eagle Mines are trading at massive premiums to their 100-day moving averages. A huge premium over a trading price suggests a possible fall in price. Primero Mining, however, is trading below it 100-day moving average due to its massive YTD losses.
The RSI (relative strength index) levels for miners and precious metals are falling. An RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. GDXJ’s RSI is close to 61.
Sibanye Gold, Gold Fields, Agnico Eagle Mines, and Primero Mining have RSI levels of 66.5, 58.7, 57.3, and 37.6, respectively.