Precious metal mining companies usually follow precious metals. Precious metals seem to be in the doldrums lately over the strength in the US dollar and the potential movement of US interest rates. The recent slump in demand for haven assets has also affected mining stocks.
In this part of the series, we’ll look at the primary technical readings—moving averages and RSI (relative strength index) scores—of a select group of miners. The miners we’ve selected for analysis are Royal Gold (RGLD), Goldcorp (GG), Newmont Mining (NEM), and Wheaton Precious Metals (SLW).
Among these four miners, SLW has declined about 3.3% on a year-to-date basis. RGLD, GG, and NEM have increased 7.8%, 5.7%, and 5.3%, respectively. The mining-based fund included in this discussion is the VanEck Vectors Gold Miners ETF (GDX), which had a YTD fall of 4.2%.
All four miners included in this discussion fell on May 15 due to the slump of precious metals. RGLD, GG, NEM, and SLW fell 0.54%, 1.9%, 2.2%, and 1.9%, respectively, on May 15. NEM is trading above its above 100-day moving average but below its 20-day moving average.
SLW is trading above its 20-day and 100-day moving averages, while GG and RGLD are trading below their 20-day and 100-day moving averages.
A stock that’s trading at a huge discount to its moving average suggests a potential rise in its price, while a significant premium indicates a potential fall in its price. All four miners’ target prices are considerably higher than their current trading prices, suggesting potential rises.
On May 15, RGLD, GG, NEM, and SLW had RSI scores of 47.3, 37.6, 38.3, and 57.3, respectively. GDX had an RSI score of 44.4. An RSI score above 70 suggests an impending downward price correction, while a score below 30 suggests an upward price correction.