Mining stock analysis
The beginning of 2018 has been remarkably good for precious metals and their mining shares. Let’s look now at precious metal mining companies’ technical indicators such as implied volatility and RSI (relative strength index) readings.
For this analysis, we’ve selected Newmont Mining (NEM), Sibanye Gold (SBGL), Agnico Eagle Mines (AEM), and AngloGold Ashanti (AU). Among these four selected miners, Sibanye Gold has fallen 6.7% during the last 30 trading days, while NEM, AEM, and AU have risen 6.8%, 3.2%, and 10.3%, respectively, on a 30-day trailing basis.
The famous gold and silver mining funds that also fell on Monday due to the fall in precious metals are the Global X Silver Miners ETF (SIL) and the iShares MSCI Global Gold Miners (RING). They fell 2.3% and 3.2%, respectively, that day.
The implied volatility readings of NEM, SBGL, AEM, and AU are 27.4, 50.8, 30.9, and 38.4, respectively. Call-implied volatility measures the price changes in a stock with respect to the fluctuations in the price of its call option. Volatility in miners is often known to be much higher than volatility in precious metals.
The RSI (relative strength index) measures whether a stock is overbought or underbought. When a stock’s RSI level is above 70, it shows that the asset could be in overbought territory, so its price might deteriorate.
When a stock’s RSI indicator is below 30, it indicates that the stock could be oversold, and its price could rise. NEM, SBGL, AEM, and AU have RSI levels of 61.8, 35.5, 52.7, and 63.4, respectively.