Price variations in precious metals are often closely tracked by mining stocks. Before investors opt for mining stocks, there are a few technical indicators they should evaluate.
Call-implied volatility is a measurement of the variations in a stock’s call option price. On September 5, 2017, Buenaventura, Hecla, IAMGOLD, and Harmony had volatility of 35.6%, 38.9%, 44.3%, and 58.3%, respectively. Mining stocks are often more volatile than precious metals.
A stock’s RSI score 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 decline. If a stock’s RSI score is below 30, it could be oversold and might correct upward.
The aforementioned miners’ RSI scores have recuperated recently. Buenaventura, Hecla, IAMGOLD, and Harmony have RSI scores of 85.8, 80.7, 90.6, and 75.6, respectively.
Mining funds such as the VanEck Vectors Junior Gold Miners ETF (GDXJ) and the Global X Silver Miners ETF (SIL) also follow changes in precious metal prices. The funds have risen ~6.1% and ~2.4%, respectively, year-to-date.