We’ll briefly analyze mining stocks’ correlation with gold. Gold is the most crucial of the precious metals, and mining stocks tend to increasingly take their price changes from gold.
Correlation analysis A correlation study of mining stocks to precious metals is important. It gives insights about miners’ potential price movement. Although the mining shares are essentially part of the market’s equity segment, they’re more coordinated with metals’ movement. Gold is the most dominant precious metals. We’ll discuss how Yamana Gold (AUY), Pan American Silver (PAAS), Coeur […]
As of November 16, 2017, Alamos Gold, First Majestic Silver, Sibanye Gold, and AngloGold Ashanti had call-implied volatilities of 46.9%, 54.6%, 63%, and 40.9%, respectively.
If we look beyond the dollar influence on precious metals, we can analyze how the probability of an interest rate hike could influence precious metals and their miners.
On October 23, Alamos, First Majestic Silver, Sibanye Gold, and Gold Fields had call implied volatilities of 46.9%, 54.6%, 63%, and 40.4%, respectively.
The PowerShares DB Gold Fund (DGL) and the Vaneck Merk Gold Trust (OUNZ) have risen 12.1% and 12.95, respectively, year-to-date, taking strong cues from gold.
Analysts believe the fluctuation in gold can be tracked through the OPEC meetings. If they lead to higher oil prices, there could be inflationary pressure across global economies.
Let’s look at the implied volatilities of giant mining companies and their RSI (relative strength index) levels in the wake of the carnage in precious metal prices.
Gold broke its key level of $1,300 per ounce on Tuesday, October 4, 2016. But investors are seeing gold’s 200-day moving average of $1,258 per ounce as a resistance level.
Many of the fluctuations in precious metals have been determined by the Federal Reserve’s stance on the interest rate, and these fluctuations play on precious metals–based funds.
Many of the fluctuations in precious metals have been determined by the Federal Reserve’s stance on the interest rate, and these fluctuations play on precious metals–based funds.
It’s true that market volatility has been unusually low lately, but it’s expected to rise. There are several ways to mitigate the impact of rising volatility and historically, gold has been one of the more effective tools.
Demand from India Could Lend Support In the near term, India could lend support to the gold market. Indian gold demand has been very weak this year due mainly to the higher gold price. This suggests there is pent-up demand. A good monsoon season in India can lead to a bountiful fall harvest that typically […]
Yellen Channels Doobie Brothers’ “What Were Once Vices Are Now Habits” Another aspect of Janet Yellen’s Jackson Hole speech furthered our conviction for strong gold prices in the long term. She described all of the unconventional monetary policies implemented since the financial crisis (e.g., zero rates, QE, etc.) as components of the Fed’s “toolkit”. Perhaps […]
The US dollar rebounded on Tuesday, August 2, after losing on Friday due to weak US economic data. The US dollar rose by 0.15% against world currencies.
Brexit could send jitters around the globe, and investors may jump to safe-haven assets such as gold and silver, which have risen 21.2% and 25.6%, respectively, on a YTD (year-to-date) basis.
Hedge funds increased their bets on gold as prices fell after gold’s gains in 1Q16. However, hedge funds and money managers curbed their bets on gold as it fell steadily in May.
Generally, gold is viewed as a hedge against rapid inflation and lower interest rates. That makes it hard to value gold as there are no cash flows or earnings associated with it.
HSBC analysts have determined that historically, gold has risen for at least 100 trading days after the first hike by the Federal Open Market Committee.
Unforeseen events triggered the sudden increase in precious metals at the beginning of 2016. The year started with a bang and took precious metals on a high ride.
China is looking to change the international gold market with its recently established yuan-denominated gold. The Chinese benchmark rate will derived from a 1 kg contract on the Shanghai Gold Exchange.
As the dollar strengthens, dollar-denominated assets usually suffer. Foreign investors have to buy a rather expensive dollar to invest in these metals.
The talk about the commodities slump (USCI) is almost ubiquitous. It is hard to ignore the freefall most commodities (DBC) seem to have been in during the past year.
In addition to the potential headwind from higher real rates, it’s also not clear that either metal is that mispriced. Valuing commodities is notoriously difficult, as there are no cash flows.
