Analyzing a Few Core indicators for Miners

Meera Shawn - Author

Nov. 6 2017, Published 3:18 p.m. ET

Miners’ technicals

Before investors park their money in mining stocks, there are a few key indicators they should consider. Let’s look at call-implied volatility and RSI (relative strength index) scores for Alamos Gold (AGI), Gold Fields (GFI), Iamgold (IAG), and Harmony Gold Mining (HMY).

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Volatility analysis

Call-implied volatility is used to read the price fluctuations of a stock’s call option. As of November 2, 2017, AGI, GFI, IAG, and HMY had call-implied volatilities of 46.9%, 40.4%, 44.3%, and 53.3%, respectively. Mining stocks can often be more volatile than their related precious metals.

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.

AGI, GFI, IAG, and HMY have RSI scores of 31.7, 43.9, 29.6, and 43.6, 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 Merk Gold ETF (OUNZ) and the PowerShares DB Gold ETF (DGL) have fallen 10.5% and 9.6%, respectively, due to the slump in precious metal prices.


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