A Quick Look at Mining Stocks’ Technicals

Meera Shawn - Author

Nov. 16 2017, Updated 7:33 a.m. ET

Mining stocks

Before investors park their money in mining stocks, there are a few key indicators to consider. Let’s look at call-implied volatility and RSI (relative strength index) scores for Goldcorp (GG), New Gold (NGD), Sibanye Gold (SBGL), and Harmony Gold (HMY).

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Volatility analysis

Call-implied volatility is used to read price fluctuations in a stock with respect to changes in the price of the call option. As of November 14, GG, NGD, SBGL, and HMY had call-implied volatilities of 28.9%, 51.3%, 63%, and 53.3%, respectively. Mining stocks can often be more volatile than their related precious metals.

Most of these four stocks have seen 30-day trailing losses during the last month. SBGL. GG, NGD, and HMY have a 30-day loss of 1.2%, 13.3%, and 4.3%. SBGL has a 30-day trailing gain of 13.6%.

RSI scores

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

GG, NGD, SBGL, and HMY have RSI scores of 60.3, 35.6, 76.4, and 63, respectively. The recent fall in these stocks’ prices led to a considerable fall in their RSI scores. Low RSI numbers imply that a price revival could be just around the corner. On a 30-day trailing basis, the VanEck Vectors Junior Gold Miners Fund (GDXJ) and the Sprott Gold Miners (SGDM) have fallen 1% and 1.5%, respectively, due to the slump in precious metal prices.


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