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What Technical Indicators Are Saying about Miners

Updated 3 years ago

Technical details

In this part of the series, we’ll look at the RSI (relative strength index) levels and call implied volatilities of some select mining stocks. Call implied volatility is a measurement of the fluctuations in an asset’s price given the variations in the price of its call option. The RSI level predicts whether a stock is overpriced or underpriced. A level above 70 suggests that it’s overbought, and levels below 30 suggest that it’s oversold.

The VanEck Vectors Gold Miners (GDX) and the iShares MSCI Global Gold Min (RING) saw an up day on Friday due to the price revival in precious metals. The funds rose 1% and 0.62%, respectively.

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Call implied volatility and RSI level

As of October 27, 2017, First Majestic (AG), Franco-Nevada (FNV), Coeur Mining (CDE), and Harmony Gold (HMY) had implied volatility readings of 54.6%, 25.5%, 46.7%, and 53.3%, respectively. These stocks’ RSI levels have recovered recently. AG, FNV, CDE, and HMY have RSI scores of 24.5, 47.8, 12.3, and 31.1, respectively.

During the past 30 trading days, only Franco-Nevada has a positive return of 1.3%. First Majestic, Coeur Mining, and Harmony have a loss of 5.5%, 17%, and 3.9%, respectively, during the same timeframe. The past month has also been negative for precious metals, as the dollar has been rising and news of a possible interest rate hike has caught investors’ attention.