What Do the Miners’ Volatility Numbers Indicate?



Precious metal funds

Precious metal mining stocks are known to closely track the performance of their respective precious metals. The Sprott Gold Miners ETF (SGDM) and the Global X Silver Miners ETF (SIL) rose due to the revival in precious metal prices. Mining stocks often display more volatility than metals.

It’s important to monitor the implied volatilities of large mining stocks as well as their RSI (relative strength index) levels, particularly in the wake of changing precious metal prices. In this article, let’s focus on AngloGold Ashanti (AU), Hecla Mining (HL), Kinross Gold (KGC), and Eldorado Gold (EGO).

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Implied volatility

Call implied volatility takes into account the changes in an asset’s price due to variations in the price of its call option. During times of global and economic turbulence, volatility is higher than in a stagnant economy.

On January 26, 2017, the volatilities of AngloGold Ashanti, Hecla Mining, Kinross Gold, and Eldorado Gold were 50.8%, 52.3%, 56.6%, and 54.1%, respectively.

RSI levels

A 14-day RSI level above 70 indicates the possibility of a downward movement in price, whereas a level below 30 indicates the possibility of upward price movement.

The RSI levels for each of these four mining giants have risen due to their rising stock prices. AngloGold Ashanti, Hecla Mining, Kinross Gold, and Eldorado Gold had recent RSI levels of 51.9, 55.7, 55.4, and 52.0, respectively. These miners have also seen reasonable 30-day trailing returns.


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