Mining stocks react
Precious metal prices saw a sudden fall in mid-April 2017, along with precious metal mining funds and stocks. However, the revival in precious metals over the past week has benefited at least a few mining companies. The haven appeal of precious metals got a boost from the G7 meeting. However, investors are still placing a great deal of importance on the upcoming Fed meeting where the Fed will make a decision in regards to interest rates.
Gold Fields (GFI), Newmont Mining (NEM), Coeur Mining (CDE), and Barrick Gold (ABX) have risen 26.6%, 0.12%, 8.6%, and 2.5% YTD (year-to-date), respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has risen a marginal 1.2%.
The above miners are all trading above their short-term 20-day moving averages except Barrick Gold.
Any big premium on a stock indicates a potential fall in its price. However, a discount can signal a rise. The target prices of the above mining stocks are also significantly higher than their current prices except for Gold Fields. A greater target price is an indication of a potential price rise.
When a stock’s RSI (relative strength index) score is above 70, it’s considered to be overbought and could fall. On the other hand, an RSI score below 30 signals that a stock has been oversold and could rise. Mining companies’ RSI scores have risen noticeably over the past week. GDXJ now has an RSI level of 60.6.
The returns of most mining companies over the past three months have been negative.