Analyzing Miners’ Implied Volatility


Apr. 10 2018, Published 4:47 p.m. ET

Mining stock analysis

Recently, the unrest in the markets has had a big effect on precious metals and the US dollar. The US dollar has a big impact on dollar-denominated precious metals and also on mining companies. In this part of the series, we’ll look at miners’ RSI (relative strength index) scores and implied volatility. The miners we’ve selected for our analysis are First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and Goldcorp (GG).

In the last 30 days, miners have seen a mixed performance. AG, RGLD, and GG have rebounded 6.9%, 4.3%, and 7.1%, respectively, on a 30-day trailing basis, while BTG has dropped 6.2%.

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Volatility analysis

Implied volatility measures price fluctuations in an asset based on changes in the price of its call option. AG, BTG, RGLD, and GG have implied volatilities of 53.4%, 61.8%, 25%, and 33.5%, respectively.

RSI readings

A stock’s RSI score indicates whether it’s overbought or underbought. An RSI level of 70 suggests the stock could be overbought and that its price could fall, and an RSI level below 30 indicates the stock could be oversold and that its price could rise. AG, AGI, RGLD, and GG have RSI scores of 57.7, 47.4, 56.3, and 60.4, respectively.

The Global X Silver Miners (SIL) and the VanEck Vectors Gold Miners (GDX) funds have also been closely tracking precious metals. SIL and GDX have seen YTD losses of 8.6% and 5.4%, respectively, while they have also fallen during the past few trading days.


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