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Analyzing Mining Stocks’ Moving Average Prices

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Mining companies have risen

Donald Trump’s victory in the 2016 US presidential election initially resulted in fear among precious metal investors. But as these concerns subsided, precious metals and mining stocks slowly started falling.

The Federal Reserve’s interest rate hike in December 2016 also pressured precious metals, which joined mining companies in a downward trend. Investors remain wary about the country’s economic performance, and precious metals and mining stocks have risen as a result.

Some investors expected choppy markets for precious metal mining companies after Trump’s victory, but that didn’t happen. Miners typically follow precious metals.

On a YTD (year-to-date) basis, mining stocks have risen. Coeur Mining (CDE), Barrick Gold (ABX), Cia De Minas Buenaventura (BVN), and Hecla Mining (HL) have risen 0.67%, 20.9%, 21.5%, and 23.1%, respectively. The Global X Silver Miners Fund (SIL) has risen 22.5% YTD.

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Technical indicators

All the above four mining companies, except Coeur Mining, are trading above their shorter-term 20-day moving averages as well as their 100-day moving averages.

A substantial premium on a stock’s trading price suggests a potential fall in price. A discount could indicate an increase in prices. Target prices for the above three mining companies are significantly higher than their current prices, which suggests a positive outlook. Coeur Mining is trading at a discount compared to its 20- and 100-day moving average price.

An RSI (relative strength index) 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. Mining companies’ RSI readings are also slowly increasing.

On February 23, 2017, SIL’s RSI was close to 66.8, which suggests there could be a further price downward correction. There will also most likely be another interest rate hike, which could negatively impact precious metals as well as precious metal mining companies.

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