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What Mining Stock RSI Indicators Tell Us

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Nov. 3 2017, Published 2:06 p.m. ET

Technical details

In this part of our series, we’ll look at the RSI (relative strength index) levels and call implied volatilities of select mining stocks. Call implied volatility measures the fluctuations in an asset’s price given the variations in the price of its call option. RSI indicates whether a stock is overpriced or underpriced, with levels above 70 suggesting overbought and levels below 30 suggesting oversold.

 
 

The VanEck Vectors Junior Gold Miners (GDXJ) and the Sprott Gold Miners (SGDM) have seen losses during the past five trading days, due to the recent drop in precious metals. GDXJ and SGDM have fallen 0.83% and 0.32%, respectively.

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Call implied volatility and RSI

On November 1, 2017, Alamos Gold (AGI), B2Gold (BTG), Newmont Mining (NEM), and Franco-Nevada (FNV) had implied volatility readings of 46.9%, 54.8%, 25.9%, and 25.5%, respectively. AGI, BTG, NEM, and FNV have RSI scores of 23.5, 33.8, 21.2, and 45.7, respectively.

During the past 30 trading days, only Franco-Nevada has seen a positive return at 3%. AGI, BTG, and NEM have seen a loss of 7.5%, 9.3%, and 4.9%, respectively, during the same period.

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

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