Where Do the Volatilities of Mining Stocks Point?

Meera Shawn - Author

Aug. 18 2020, Updated 6:23 a.m. ET

Precious metals funds

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

Precious metals–based funds such as the iShares MSCI Gold Trust ETF (RING) 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 First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and Goldcorp (GG).

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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 First Majestic, B2Gold, Royal Gold, and Goldcorp were 66.8%, 77.5%, 40.1%, and 41.9%, respectively, on November 21, 2016.


The RSIs of these four mining giants fell due to their falling share prices. First Majestic, B2Gold, Royal Gold, and Goldcorp saw RSIs of 50, 43, 48, and 39, respectively. An RSI level of close to 30 indicates the possibility of a rise in price. These companies’ RSI figures have risen compared to last week’s levels.

The trailing-30-day returns of most mining companies are negative due to the diminishing safe-haven appeal of precious metals amid fears of an interest rate rise.


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