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A Look at Miners’ Volatility

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Aug. 18 2020, Updated 6:27 a.m. ET

Mining stock analysis

This article will look at call implied volatility and RSI (relative strength index). The miners we have selected in this article for analysis include Royal Gold (RGLD), Newmont Mining (NEM), Gold Fields (GFI), and Cia De Minas Buenaventura (BVN).

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Volatility

Call implied volatility refers to price changes with respect to the price changes in the call option price. RGLD, NEM, GFI, and BVN have call implied volatilities of 24.8%, 25.9%, 40.4%, and 35.3%, respectively. The volatility in these stocks is often much higher than the volatility in precious metals.

RSI scores

RSI scores are used to evaluate whether a stock is overpriced or underpriced. If a stock’s RSI score is greater than 70, it may be overbought, and its price may fall. If a stock’s RSI score is lower than 30, it could be oversold, and its price may rise.

RGLD, NEM, GFI, and BVN have RSI scores of 37.5, 60.6, 57.1, and 43.2, respectively. The mining-based funds like the VanEck Vectors Junior Gold Miners Fund (GDXJ) and the Global X Silver Miners (SIL) have a five-day trailing gain of 0.4% and 0.93%, respectively.

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