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How Mining Stocks Are Performing in February 2017

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Feb. 28 2017, Updated 7:40 a.m. ET

Mining companies recouped losses

Donald Trump’s victory in the 2016 US presidential election initially struck fear into precious metal investors. However, uncertainty in the market since the election has boosted precious metals and precious metal mining companies.

The Federal Reserve’s rate hike in December 2016 pressured precious metals, which have now joined mining companies in a downward trend. Precious metal mining stocks typically move in the same direction as precious metals. Some investors expected choppy waters for miners after Trump’s victory, but that didn’t materialize.

On a year-to-date basis, B2Gold (BTG), Royal Gold (RGLD), Sibanye Gold (SBGL), and Agnico Eagle Mines (AEM) have seen reasonable upswings of 42.6%, 12.3%, 26.3%, and 17.7%, respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has seen a year-to-date rise of 31.5%.

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Technical indicators

The four mining stocks mentioned above are trading above their 100-day moving averages and their 20-day moving averages. A substantial premium on a stock’s trading price suggests a potential fall in its price, while a discount could indicate a rise in its price.

The target prices of the four companies are significantly higher than their current prices, suggesting a positive outlook.

RSI

An RSI (relative strength index) level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. Mining companies’ RSI readings are slowly increasing. 

The VanEck Vectors Junior Gold Miners ETF’s (GDXJ) RSI level was near 75, suggesting that it could be a candidate for a downward price correction. Any future interest rate hikes could negatively impact precious metals and precious metal miners.

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