Mining Shares: Analyzing a Few Key Technical Details



Technical reading

When investors consider parking money in the mining sector, there are a few crucial indicators that they should watch. In this part, we’ll discuss the RSI (relative strength index) levels and call implied volatility. Mining shares’ volatility can often be higher than the metals.

Call implied volatility is used to measure the fluctuations in a stock’s price—given the changes in the price of its call option. The RSI indicates whether a share is overpriced or underpriced—above 70 suggests that it’s overbought and below 30 indicates that it’s oversold.

Notably, mining funds like the Global X SIlver Miners (SIL) and the VanEck Merk Gold Trust (OUNZ) have risen 4.4% and 11.1%, respectively, on a year-to-date basis.

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Call implied volatility and RSI level

As of October 23, 2017, Agnico Eagle Mines (AEM), Silver Wheaton (SLW), Franco-Nevada (FNV), and Yamana Gold (AUY) had implied volatility readings of 33.6%, 30.8%, 25.5%, and 48.4%, respectively.

Recently, the above mining shares’ RSI levels recovered. Agnico Eagle Mines, Silver Wheaton, Franco-Nevada, and Yamana Gold have RSI scores of 47.6, 82.2, 66.6, and 48.9, respectively.

An RSI level above 70 indicates that the share price might fall, while an RSI below 30 indicates that the price might rise. The RSI number can be important because it gives clues about the metal’s upcoming movement.


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