Volatility in Mining Stocks at the Beginning of December



Precious metal funds

Many of the fluctuations in precious metals have been a result of speculation about the Fed’s interest rate stance. Precious metal–based funds such as the VanEck Vectors Junior Gold Miners ETF (GDXJ) and the Global X Silver Miners ETF (SIL) have fallen over the past few months. On a trailing 30-day basis, these two funds fell substantially. However, they continue to witness a year-to-date gain.

Next, 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 Coeur Mining (CDE), Barrick Gold (ABX), AngloGold Ashanti (AU), and Hecla Mining (HL).

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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 in a stagnant economy.

The volatilities of Coeur Mining, Barrick Gold, AngloGold, and Hecla were 62.3%, 48.3%, 51.1%, and 57.1%, respectively, on December 5, 2016. The volatility has been comparatively lower.

RSI levels

The RSI levels for each of these four mining giants fell due to their falling share prices. Goldcorp, Newmont, Agnico Eagle, and Barrick saw RSI levels of 50.3, 47.9, 42.1, and 54.9, respectively.

The trailing 30-day returns of most mining companies are negative due to the diminishing safe-haven appeal of precious metals. Hecla Mining has a 30-day trailing gain. Silver mining companies showed comparatively lower losses.


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