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Why Mining Company Stocks Are Rising Year-to-Date

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Dec. 4 2020, Updated 10:52 a.m. ET

Mining companies have bounced back

Donald Trump’s victory in the US presidential election on November 8, 2016, initially resulted in fear among precious metal investors. As those fears subsided, precious metals and mining stocks slowly started falling. The interest rate hike in December 2016 also played negatively for them, and precious metals and their mining companies kept falling.

Some investors expected choppy markets for precious metal mining companies after Trump’s victory, but that didn’t happen. Miners are often known to follow precious metals. Most of the time, they move in the same direction.

Let’s look at the performances of mining companies on a YTD (year-to-date) basis:

  • First Majestic Silver (AG): rose 40.0%
  • B2Gold (BTG): rose 41.8%
  • Royal Gold (RGLD): rose 13.0%
  • Franco-Nevada (FNV): rose 13.4%

These mining companies also saw massive YTD rises in 2016 despite their poor performances in the last quarter. The VanEck Vectors Gold Miners ETF (GDX) also saw a YTD rise of 21.4%.

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Technical indicators

The above four mining companies are trading close to their 100-day moving averages. However, they’re above their shorter-term, 20-day moving averages. 

A substantial premium on a stock’s trading price suggests a potential fall in prices. A discount could indicate a rise in prices. 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 slowly rising. As of February 6, 2017, GDX’s RSI level was close to 69.5. 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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