How Mining Stocks Move in Relation to Precious Metals

Meera Shawn - Author

Mar. 26 2018, Updated 5:25 p.m. ET

Miners’ performances

In general, most mining companies rose on Friday, March 23, following gold and silver. Increased market volatility may have been the main reason behind precious metals’ and miners’ bounceback.

In this article, we’ll look at the primary technical readings—moving averages and relative strength index (or RSI) scores—for select miners. The miners we’ve selected for analysis are Newmont Mining (NEM), Sibanye Gold (SBGL), Gold Fields (GFI), and IAMGOLD (IAG), which all rose on March 23, by 3.1%, 0.26%, 3%, and 1.6%, respectively.

However, all of the miners but NTM have fallen this year. NEM has risen 3.3%, while SBGL, GFI, and IAG have fallen 22.6%, 4.7%, and 10.1%, respectively. The VanEck Vectors Gold Miners ETF (GDXJ) has fallen 4%.

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Moving averages

All four miners but SBGL are trading above their 20-day moving averages. NEM and GFI are also above their longer-term 100-day moving averages.

A stock trading at a discount to a moving average is indicative of a potential increase in stock price, while a significant premium suggests a decline. All four miners’ target prices are higher than their current trading prices, indicating a positive outlook.

Relative strength index

On March 23, 2018, NEM, SBGL, GFI, and IAG had RSI readings of 53.9, 37.6, 58.8, and 46.9, respectively. The VanEck Vectors Gold Miners ETF had an RSI score of 59.2. The stocks’ scores have recovered along with their prices. An RSI score above 70 suggests an impending downward price correction, while a score below 30 indicates an upward price correction.


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