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Where Do Major Mining Stocks’ Technicals Point?

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Nov. 17 2016, Published 1:26 p.m. ET

Precious metals funds

Many of the fluctuations in precious metals have been a result of speculation about the Federal Reserve’s interest rate stance. In this article, let’s look at the major precious metals mining stocks.

Precious metals–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 substantially as metals, too, have plummeted.

Let’s look at the implied volatilities of giant mining companies and their RSI (relative strength index) levels in the wake of the carnage in precious metals prices. We’ll take a look at Goldcorp (GG), Newmont Mining (NEM), Agnico Eagle Mines (AEM), and Barrick Gold (ABX).

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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 than it is in a stagnant economy. The volatilities of Goldcorp, Newmont, Agnico, and Barrick were 50.1%, 47.9%, 51.8%, and 58%, respectively, on November 14, 2016.

RSI

The RSIs (relative strength index) for each of these four mining giants fell due to their falling share prices. Goldcorp, Newmont, Agnico, and Barrick saw RSI levels of 33, 37, 29, and 31, respectively. An RSI level of close to 30 indicates the possibility of a rise in price.

The trailing-30-day returns of most mining companies are negative due to the diminishing safe-haven appeal of precious metals.

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