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What Mining Stocks’ Relative Strength Index Tells You

Meera Shawn - Author
By

Apr. 9 2018, Published 2:20 p.m. ET

Mining stock analysis

The precious metals and miners were widely expected to react negatively after the Fed decided to hike interest rates.

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 New Gold (NGD), Sibanye Gold (SBGL), Gold Fields (GFI), and Agnico-Eagle Mines (AEM).

In the last 30 days, the miners have seen a mixed performance. AEM has risen 9.7% while NGD, SBGL, and GFI have fallen 0.78%, 6.8%, and 3.5%, respectively.

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Volatility analysis

Implied volatility measures price fluctuations in an asset based on changes in the price of its call option. NGD, SBGL, GFI, and AEM have implied volatilities of 51.4%, 53.4%, 38.9%, and 30.7%, 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. NGD, SBGL, GFI, and AEM have RSI scores of 63.2, 46.1, 54, and 68.5, respectively.

The Physical Swiss Gold Shares (SGOL) and Physical Silver Shares (SIVR) funds have also been closely tracking precious metals. SGOL has increased 1.7% on a YTD basis, while SIVR has dropped 3.3%.

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