Mining stock analysis
Following the revival of the US dollar, precious metals and mining stocks have tumbled significantly over the last few months. Among the top precious metal mining funds, the Global X Silver Miners ETF (SIL) and the VanEck Vectors Gold Miners ETF (GDX) have also been impacted. These two funds have fallen about 7.6% and 1.8%, respectively, during the last month. They also have respective YTD (year-to-date) losses of 13.1% and 5.6%.
The potential upward movement in interest rates could cause a further slump in precious metals, taking miners along for the ride. Miners tend to closely follow precious metals.
In this part of the series, we’ll look at miners’ RSI (relative strength index) scores and implied volatility readings. The miners we’ve selected for our analysis are First Majestic Silver (AG), Royal Gold (RGLD), Franco-Nevada (FNV), and Coeur Mining (CDE). Among these four miners, only Franco-Nevada (FNV) has increased 1.5% over the last month. AG, RGLD, and CDE have dropped 15.6%, 2.0%, and 9.0%, respectively, during the same timeframe.
Implied volatility measures the price fluctuations in an asset’s price based on variations in the price of its call option. AG, RGLD, FNV, and CDE have implied volatility readings of 56.3%, 53.4%, 25.6%, and 41.1%, respectively.
An RSI score higher than 70 suggests that a stock could be overbought and that its price could fall. Conversely, an RSI score below 30 indicates that a stock could be oversold and that its price could rise. AG, RGLD, FNV, and CDE have RSI scores of 34.0, 33.8, 50.7, and 39.0, respectively.