Precious metal mining companies closely follow the price changes in gold, and this has been true during the past week. The choppy markets of July 7 brought down precious metals and miners, although they have risen since then.
Call-implied volatility measures the impact of fluctuations in the price of its call option on the price of the asset. On July 13, 2017, Franco Nevada, Randgold Resources, Yamana Gold, and Cia De Minas had implied volatilities of 28%, 28.4%, 55.4%, and 38.6%, respectively.
Mining stocks’ volatilities are often greater than the volatilities of precious metals.
The relative strength index (or RSI) measures whether a stock is overbought or oversold. If a stock’s RSI is above 70, it may be overbought, and its price could fall. If the RSI is below 30, it could be oversold and correct upward.
The RSI levels of the above-mentioned miners have recently witnessed revivals. Franco Nevada, Randgold Resources, Yamana Gold, and Cia De Minas have RSIs of 34.3, 43.5, 38.7, and 54.3, respectively.
Leveraged mining funds like the Direxion Daily Gold Miners ETF (NUGT) and the ProShares Ultra Silver ETF (AGQ) are also affected by changes in precious metal prices. These two funds have seen 30-day trailing losses of 9.3% and 6.1%, respectively.