Mining Stocks’ Volatility: A Comparison



Precious metal funds

Many of the fluctuations in precious metals are due to speculation about the Federal Reserve’s interest rate stance. In this article, we’ll look at the fundamentals of South African precious metal miners.

Precious-metal-based funds such as the Sprott Gold Miners ETF (SGDM) and the Global X Silver Miners ETF (SIL) have seen their returns fall in the past few months. On a trailing-30-day basis, these two funds have fallen 11.8% and 14.9%, respectively, although they’ve risen year-to-date.

Let’s look at the implied volatilities of large mining stocks and their RSI (relative strength index) levels in the wake of the carnage in precious metal prices. We’ll look at Royal Gold (RGLD), Goldcorp (GG), Newmont Mining (NEM), and Agnico Eagle Mines (AEM).

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Implied volatility

Call implied volatility takes into account the changes in an asset’s price due to variations in the price of its call option. During times of global and economic turbulence, volatility is higher. The volatility of Royal Gold, Goldcorp, Newmont, and Agnico were 40.1%, 41.8%, 41.7%, and 42.8%, respectively, on November 21, 2016.

Relative strength index

The RSI (relative strength index) levels for each of these four mining giants fell due to their falling share prices. Royal Gold, Goldcorp, Newmont, and Agnico saw RSI levels of 48.6, 39.3, 41, and 37.5, respectively. The trailing-30-day returns of most of the mining companies are negative due to the diminishing safe-haven appeal of precious metals.


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