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Chart in Focus: Mining Stocks’ Performance in 2017

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Jan. 27 2017, Updated 9:07 a.m. ET

Mining stocks react

Donald Trump’s recent victory in the US presidential election initially resulted in fear among precious metal investors. The rate hike phenomenon was also negative for precious metal and mining companies.

The Brexit referendum in June 2016 also had a significant impact on mining companies and precious metals. Some investors expected choppy markets for precious metal mining companies after Trump’s victory, but that didn’t happen. Miners generally move in the same direction as precious metals.

On a YTD (year-to-date) basis, Silver Wheaton (SLW), Randgold Resources (GOLD), Yamana Gold (AUY), and Coeur Mining (CDE) rose 4.7%, 5.1%, 12.5%, and 19.8%, respectively.

These mining companies also saw massive YTD gains in 2016 despite the bad performance in the last quarter. The VanEck Vectors Junior Gold Miners ETF (GDXJ) also saw a YTD rise of 14.8%.

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Technical indicators

Currently, most mining stocks are trading below their 100-day moving averages. However, they are above their shorter-term 20-day moving averages.

A substantial premium on a stock’s trading price suggests a potential fall in prices, while a discount could indicate a rise in prices. The target prices for the above four mining companies are significantly higher than their current prices, which suggests a positive outlook.

Mining companies’ RSI (relative strength index) readings are slowly increasing. On January 11, 2016, GDXJ’s RSI level was close to 60.6. An RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.

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