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What Mining Stock Performance Suggests

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Nov. 24 2017, Updated 7:32 a.m. ET

Miners’ technicals

Besides reading the directional move in precious metals prices, it’s also important that we read a few crucial technical indicators for these stocks. This article focuses on call-implied volatilities and RSI levels. The miners we selected for analysis include Goldcorp (GG), New Gold (NGD), Gold Fields (GFI), and Silver Wheaton (SLW).

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Call-implied volatility

Call-implied volatility is used to analyze price fluctuations for a stock with respect to changes in the stock’s call option. As of November 21, Goldcorp, New Gold, Gold Fields, and Silver Wheaton had call-implied volatilities of 28.9%, 51.3%, 40.4%, and 30.8%, respectively. Miners’ volatility is much higher than the volatility of precious metals.

RSI levels

RSI levels assess whether a stock is overvalued or undervalued. If a stock’s RSI score is higher than 70, it might be overbought, and its price might fall. If a stock’s RSI score is greater than 30, it could be oversold, and its price might rise. Among the four miners that we’re discussing, only New Gold has a 30-day trailing loss of 11% while GG, GFI, and SLW have a marginal 30-day trailing gain.

Goldcorp, New Gold, Gold Fields, and Silver Wheaton have RSI scores of 52.6, 44.1, 50, and 52.8, respectively.

The VanEck Vectors Junior Gold Miners (GDXJ) and Global X Silver Miners (SIL) rose 0.5% and 1.6%, respectively, on Tuesday.

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