Precious metal miners closely follow fluctuations in gold. However, this isn’t always the case. For example, on July 27, 2017, gold prices rebounded, but many miners fell. Overall, the Market Vectors Gold Miners ETF (GDX) was 1.2% lower for the day.
In this part, we’ll look at some important technical indicators including volatility figures and RSI levels for major miners such as Hecla Mining (HL), Royal Gold (RGLD), Silver Wheaton (SLW), and Franco-Nevada (FNV).
Call-implied volatility is a measure of the fluctuations in an asset’s price when it comes to the variations in the price of its call option. On August 3, Hecla, Royal Gold, Silver Wheaton, and Franco-Nevada had volatilities of 39.8%, 26.4%, 30.8%, and 26.7%, respectively. The mining stocks’ volatility is often higher than precious metals’ volatilities.
The RSI (relative strength index) measures whether a stock has been overbought or oversold. If a stock’s RSI is above 70, it may be overbought and its price might fall. If a stock’s RSI is below 30, it could be oversold and might correct upward.
The RSI levels for the miners mentioned above have recently witnessed revivals. Hecla, Royal Gold, Silver Wheaton, and Franco-Nevada have RSI levels of 39.8, 84.7, 58.7, and 59.5, respectively. There’s been a significant rebound in precious metal prices.
Mining-based funds like the VanEck Vectors Junior Gold Miners (GDXJ) and the Sprott Gold Miners (SGDM) are also impacted by changes in precious metal prices. These two funds rose 0.52% and 0.41%, respectively, on a five-day trailing basis.