Precious metal funds
Many of the fluctuations in precious metals have been a result of speculation about the Federal Reserve’s interest rate stance. In this part of the series, we’ll look at the fundamentals of South African precious metal miners.
Precious-metal-based funds such as the Ishares MSCI Global Gold Min (RING) and the Global X Silver Miners ETF (SIL) have fallen over the past few months. On a trailing-30-day basis, these two funds have fallen 17.1% and 12.7%, respectively, although they’ve risen year-to-date.
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 Sibanye Gold (SBGL), Silver Wheaton (SLW), Yamana Gold (AUY), and Pan American Silver (PAAS).
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 Sibanye, Silver Wheaton, Yamana, and Pan American were 66.8%, 49.2%, 64.4%, and 52.7%, respectively, on December 5, 2016.
The RSI levels for each of these four mining giants fell due to their falling share prices. Sibanye, Silver Wheaton, Yamana, and Pan American saw RSI levels of 31.8, 38.4, 40.7, and 59.2, respectively.
The trailing-30-day returns of most of the mining companies are negative due to the diminishing safe-haven appeal of precious metals.