Mining stocks react
Precious metals have witnessed sudden and considerable downswings in their prices since mid-April 2017. The falls in gold and precious metals prices have caused precious metal mining stocks and funds to fall as well. The past one week, however, was beneficial for the mining companies, as precious metals recouped their losses.
Investors also remain concerned about the potential impact of any further interest rate hikes the Federal Reserve may pursue on precious metals and mining stocks.
On a YTD (year-to-date) basis, First Majestic Silver (AG), Kinross Gold (KGC), and Eldorado Gold (EGO) have risen 17.3%, 35.1%, and 5%, respectively. However, Alamos (AGI) has seen a minor loss of 2.2%. Meanwhile, the Sprott Gold Miners (SGDM) has risen 8.9% YTD.
The four miners mentioned above are trading above their short-term 20-day moving averages except Eldorado Gold. Alamos and Eldorado are also trading at a discount to their 100-day moving averages. A substantial premium on a stock’s price suggests a potential fall in its price, while a discount could indicate a rise.
The target prices of all four of these mining stocks are significantly higher than their current prices, suggesting a positive outlook.
When an RSI (relative strength index) is above 70, it indicates that a stock has been overbought and could fall. However, an RSI of below 30 indicates that a stock has been oversold and could rise. Mining companies’ RSIs appear to be slowly increasing. SGDM’s RSI is almost 56.