Reading the Performance of Precious Metal Miners

Miners are tumbling

Most of the precious metals and their mining companies have witnessed a choppy market in most of 2018, thanks to slumping metal prices. Precious metals are more closely associated with the downturn in these precious metals rather than the overall sentiment of the equity markets.

The Global X Silver Miners ETF (SIL) is a good sentiment reader of the broader precious metal mining sector. SIL has declined ~13.1% on a YTD (year-to-date) basis and is trading below its 20-day and 100-day moving averages.

Reading the Performance of Precious Metal Miners

In this final article of the series, we’ll look at the performance of a few selected miners and their technicals. The miners chosen here are First Majestic Silver (AG), Randgold Resources (GOLD), Hecla Mining (HL), and Harmony Gold (HMY). Among these miners, only AG has a YTD gain of 9.6%. GOLD, HL, and HMY have lost 23.9%, 13.4%, and 18.7%, respectively.

Moving average indicator

HMY, GOLD, and HL are trading at considerable discounts to their 20-day and 100-day moving averages. AG is trading above its 100-day moving average but at its 20-day moving average. When a stock trades at a significant discount to its moving average, it generally suggests a potential price increase. Conversely, a considerable premium indicates a potential price decrease. All four miners’ target prices are considerably higher than their current trading prices, suggesting potential price increases.

RSI scores

On June 28, AG, GOLD, HL, and HMY had RSI scores of 52.2, 31.8, 30.8, and 39.5, respectively. SIL had an RSI score of 23.4. An RSI score above 70 suggests an impending downward price correction, while a score below 30 indicates a potential upward price correction.