uploads///MINER

Reading the Performances of Mining Stocks in February 2017

By

Updated

Mining companies recouped losses

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

On a YTD (year-to-date) basis, AngloGold Ashanti (AU), Hecla Mining (HL), Eldorado Gold (EGO), and Alacer Gold (ASR) have seen reasonable rises of 25.8%, 23.1%, 14.3%, and 31.7%, respectively.

The VanEck Vectors Gold Miners ETF (GDX) has seen a YTD (year-to-date) rise of 31.5%.

Article continues below advertisement

Technical indicators

The four above-mentioned mining stocks are trading above their 100-day moving averages and their 20-day moving averages. Remember, 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 above-mentioned mining companies are significantly higher than their current prices, suggesting a positive outlook.

RSI

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

On February 15, 2017, GDX’s RSI level was near 75, suggesting that it could be a candidate for a downward price correction. Any future interest rate hikes could further negatively impact precious metals as well as precious metals miners.

Advertisement

More From Market Realist