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Reading the Ups and Downs of Mining Stocks in September 2017

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Mining stocks react

Most mining stocks had seen good days for the past month, but the past week turned choppy. As a result, many miners fell substantially due to the fall in precious metal prices.

On a YTD (year-to-date) basis, Hecla and Eldorado Gold (EGO) have fallen 4.8% and 28.6%, respectively, while Agnico Eagle (AEM) and IamGold (IAG) have risen 8.6% and 73%, respectively. The mining-based Sprott Gold Miners (SGDM) has risen 10.6% YTD.

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Moving average analysis

Agnico-Eagle and Hecla Mining are trading below their 20-day and 100-day moving averages, while Eldorado (EGO) is now trading above its 20-day moving average but below its 100-day moving average. IamGold is now trading above its 20-day and 100-day moving averages.

The importance of moving averages in this analysis is that a reasonable premium over longer-term moving averages can suggest a near-term price fall, while a good premium over the price could be an indicator of a possible drop in price.

When the target prices of these four mining stocks are significantly higher than their current trading prices, it can indicate a possible rise in prices.

RSI levels

Due to the falling prices of precious metals over the past week, mining stocks and their RSI (relative strength index) levels have also fallen. The RSI levels of AEM, HL, EGO, and IAG are 22.2, 38.2, 60.9, and 38.7, respectively. Remember, an RSI level lower than 30 indicates a possible rise in price, while an RSI above 70 shows the possibility of a downturn in price.

SGDM’s RSI is 28.9.

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