What Do Precious Metal Miners’ Technicals Mean?


Mar. 5 2018, Updated 4:35 p.m. ET

Mining stock analysis

Precious metal miners had a good start to 2018. Their prices rose due to the rebound in precious metals. Overall, on a YTD (year-to-date) basis, precious metals’ reactions have been mixed. With more interest rate hikes probably coming in 2018, it’s expected that precious metals and precious metal miners could underperform. 

In this part of the series, we’ll focus on miners and their technical indicators. The miners we selected for this analysis are First Majestic Silver (AG), Goldcorp (GG), New Gold (NGD), and Randgold Resources (GOLD).

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These four miners have all witnessed a fall in prices over the past 30 trading days. AG, GG, NGD, and GOLD have fallen 2.1%, 9.1%, 11.1%, and 17.5%, respectively, on a 30-day trailing basis. The Sprott Gold Miners ETF (SGDM) and the iShares MSCI Global Gold Miners (RING) have risen marginally 0.70% and 0.41%, respectively, on a 30-day trailing basis.

Volatility analysis

Implied volatility measures the price variations in precious metals, given the fluctuations in the price of their call options. AG, GG, NGD, and GOLD have implied volatility figures of 56.6%, 33.4%, 56.2%, and 29.9%, 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 could be oversold and its price could increase. An indicator above 70 indicates an overbought scenario and a possible downward price correction. AG, GG, NGD, and GOLD have RSI levels of 60, 51.6, 49.4, and 47.1, respectively.


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