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Miners’ Volatility Indicators this Month

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Mining stock performance

Precious metal miners had a reasonably good start to 2018. Overall, on a YTD (year-to-date) basis, precious metals’ reactions have been mixed. With more interest rate hikes likely coming in 2018, experts expect precious metals and precious metal miners to underperform. In this part of our series, we’ll analyze miners and their technical indicators. The miners we selected for this analysis are Goldcorp (GG), Agnico-Eagle Mines (AEM), Franco-Nevada (FNV), and Barrick Gold (ABX).

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Among the four miners that we’re discussing, only Goldcorp has witnessed a price gain over the past month. It rose 5.4% on a 30-day trailing basis while Agnico, Franco, and Barrick were down 8.8%, 1.3%, and 9.5%, respectively. The VanEck Vectors Junior Gold Miners (GDXJ) and the Global X Silver Miners (SIL) have increased 1.1% and 3%, respectively, on a 30-day trailing basis.

Volatility analysis

The implied volatility reading of the mining shares measures the change in the price of the asset with respect to the fluctuations in the price of its call option. GG, AEM, FNV, and ABX have implied volatility figures of 29.5%, 28.1%, 24%, and 27.9%, respectively.

RSI readings

RSI (relative strength index) levels provide insight into 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 correct downward. 

When a stock’s RSI indicator is below 30, it suggests that the stock may be oversold and its price could increase. An index above 70 indicates an overbought scenario and a possible downward price correction. GG, AEM, FNV, and ABX have RSI levels of 39.5, 28.3, 31.3, and 23, respectively. These reasonably low RSI levels could suggest a possible rebound in price.

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