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Mining Shares: What Direction Is the RSI Level Taking?

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Dec. 4 2020, Updated 10:53 a.m. ET

Technical analysis

In this part of the series, we’ll look at the RSI (relative strength index) levels and call implied volatilities of a few selected mining shares. The call implied volatility measures the changes in an asset’s price given the changes in the price of its call option. The RSI level reads whether a stock is overpriced or underpriced. Levels above 70 suggest that the stock is overbought, while levels below 30 suggest that the stock is oversold.

The VanEck Vectors Junior Gold Miners (GDXJ) and the iShares MSCI Global Gold Min (RING) witnessed a fall in their price on Friday. They fell 0.93% and 0.56%, respectively.

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Call implied volatility and RSI

On November 3, 2017, mining shares including First Majestic Silver (AG), Royal Gold (RGLD), Newmont Mining (NEM), and Agnico-Eagle Mines (AEM) had implied volatility readings of 54.6%, 24.8%, 25.9%, and 33.6%, respectively. First Majestic Silver, Royal Gold, Newmont Mining, and Agnico-Eagle Mines have RSI scores of 31.1, 42.5, 30.9, and 37.5, respectively.

During the past 30 trading days, all four of the miners have seen a 30-day trailing loss. First Majestic Silver, Royal Gold, Newmont Mining, and Agnico-Eagle Mines have a 30-day trailing loss of 5.4%, 0.16%, 5.7%, and 2.4%, respectively.

The past month has also been negative for precious metals. The dollar has been rising and news of a possible interest rate hike caught investors’ attention.

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