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Performance of Mining Stocks in 2016

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Jan. 4 2017, Updated 4:35 p.m. ET

Mining companies’ reactions

Donald Trump’s recent victory in the US presidential election initially resulted in fear among precious metal investors. As these fears subsided, precious metals and mining stocks slowly started falling.

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.

On a YTD (year-to-date) basis, B2Gold (BTG), New Gold (NGD), Newmont Mining (NEM), and Barrick Gold (ABX) rose 141.2%, 59.9%, 86.1%, and 112.9%, respectively.

The VanEck Vectors Gold Miners ETF (GDX) saw a substantial YTD rise of 55.4%, but these returns fell sharply in the past few months.

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Technical indicators

Currently, most mining companies are trading below their 100-day moving averages. A few months ago, they were trading at discounts compared to their significant premiums. 

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 falling. Precious metals’ RSI levels are also falling. On December 5, 2016, GDX’s RSI level was close to 43.4. 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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