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Analyzing the RSI Movements of Precious Metals

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Sep. 18 2017, Updated 9:10 a.m. ET

Technical details

The price movement in precious metals is often closely traced by mining stocks. Before investors opt for mining stocks, they should analyze a few of the crucial technical details or indicators of these stocks.

Let’s look at volatility figures and RSI (relative strength index) scores for major miners Royal Gold (RGLD), Goldcorp (GG), Silver Wheaton (SLW), and AngloGold Ashanti (AU).

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Implied volatility

Call-implied volatility is a measurement of the variations in a stock’s call option price. On September 11, 2017, Royal Gold, Goldcorp, Silver Wheaton, and AngloGold had volatilities of 24.9%, 27.6%, 30.8%, and 40.0%, respectively. Mining shares are often more volatile than precious metals.

RSI indicator

A stock’s RSI level indicates if it has been overbought or oversold. If a stock’s RSI score is above 70, it may be overbought, and its price may fall. If a stock’s RSI score is below 30, it could be oversold and might correct upward.

The RSI scores for the miners mentioned above have recuperated recently. Royal Gold, Goldcorp, Silver Wheaton, and AngloGold have RSI scores of 64.8, 65.4, 67.1, and 49.8, respectively.

The VanEck Vectors Junior Gold Miners ETF (GDXJ) and the iShares MSCI Global Gold Miners (RING) also follow changes in precious metal prices. These funds fell ~14.9% and ~17.8%, respectively, on a YTD basis.

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