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Analyzing Mining Stocks’ Moving Averages

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Oct. 10 2017, Published 3:58 p.m. ET

Miners’ mixed reactions

Mining stocks showed a mixed performance on Thursday, October 5, despite the latest rebound in gold. While most of the time, mining stocks follow gold, sometimes they deviate. Usually, silver mining stocks are closely associated with the price fluctuations in silver and gold because such stocks react to movements in gold.

Precious metals continued to rise on Wednesday, October 4, while gold witnessed a rebound. Interestingly, during the previous few days, when gold had been dipping, mining stocks maintained their ground and posted gains.

Newmont Mining (NEM), Franco-Nevada (FNV), and IamGold (IAG) have seen YTD (year-to-date) rises of 11.4%, 31%, and 55.8%, respectively, while Yamana Gold (AUY) has seen a YTD loss of 7.1%.

The SPDR Gold Shares (GLD) has risen 10% YTD, closely tracking the day-to-day changes of gold.

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Moving averages

All four of the above mining stocks are trading below their short-term 20-day moving averages but above their long-term 100-day moving averages—except for Yamana Gold, which is trading below its 100-day moving average.

Remember, a considerably high premium over the 20-day and 100-day moving averages could indicate that their prices may soon decline. But a significant discount below the 20-day and 100-day moving averages could suggest that prices may increase.

The RSI (relative strength index) levels of NEM, FNV, AUY, and IAG are now 51, 37.1, 33.3, and 35.8, respectively. GLD’s RSI is 26.1.

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