What Miners’ Relative Strength Levels Indicate


Oct. 20 2017, Updated 7:41 a.m. ET

Mining stocks

Despite the aggressive fall in precious metals on Tuesday, the mining stocks didn’t all witness a complete drop in prices. A few of the miners tumbled. However, many of them maintained their ground. While metals and mining stocks move in sync with each other most of the time, sometimes they do move in different directions due to stock-specific or market-specific reasons.

Below, we’ll take a look at the volatility figures and RSI (relative strength index) levels of Alamos Gold (AGI), First Majestic Silver (AG), B2Gold (BTG), and New Gold (NGD).

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Volatility of miners

Call implied volatility is used to read the variations in the price of a stock with respect to changes in the price of its call option. On October 17, 2017, AGI, AG, BTG, and NGD had implied volatilities of 46.9%, 54.5%, 54.8%, and 51.3%, respectively. The volatilities of mining stocks are often higher than the volatilities of precious metals.

RSI level

RSI levels help us analyze whether a stock is overbought or oversold. If a stock’s RSI is higher than 70, it could be overbought, and the price could fall. If a stock’s RSI is less than 30, it’s considered oversold, and the price could increase.

The RSI levels of AGI, AG, BTG, and NGD are currently 62.3, 47.2, 35.9, and 53.1, respectively. The recent rebound in these stock prices has led to rises in their RSI levels. All four of these miners have shown 30-day trailing losses, and AG is flat.

The VanEck Vectors Gold Miners (GDX) and the Sprott Gold Miners (SGDM) have year-to-date gains of 12% and 10.6%, respectively.


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