Yahoo Finance Precious Metal Miners Slide alongside Precious Metals
Insights into the Platinum and Palladium Markets
Miners followed metals
Precious metal miners have been following metals fairly closely. Miners are often known to amplify the returns of previous metals, as they take directional moves from these metals.
Because 2016 brought positive sentiment for precious metals due to increased safe-haven bids, miners also recovered their 2015 losses. However, these metals have been pulled back, and the losses in mining stocks are once again amplified.
Royal Gold (RGLD), GoldCorp (GG), Gold Fields (GFI), and Alacer Gold (ASR) rose by 53.7%, 45.2%, 30%, and 24.3%, respectively, on a YTD (year-to-date) basis. Crucial contributors to the miners’ rally in 2016 have been safe-haven bids on gold and silver.
However, Gold Fields and Alacer Gold fell by 2.7% and 0.32%, respectively, on Tuesday, May 25, 2016. Royal Gold (RGLD) and Goldcorp (GG) rose by 3.8% and 2.3%, respectively, that same day.
The VanEck Vectors Gold Miners ETF (GDX) has risen by 75.3% YTD. Due to the sudden substantial increase in prices for these miners, most of them were either trading close to or below their target prices until last week. However, a few miners such as B2Gold and Goldcorp are below their target prices. This suggests a possible rise in price.
Technical indicators
Royal Gold, GoldCorp, and Alacer are trading at premiums of 19.7%, 9.3%, and 14.1%, respectively, to their 100-day moving averages. However, Gold Fields (GFI) is trading at a discount of 7.5% from its 100-day moving average price.
The VanEck Vectors Gold Miners ETF (GDX) is also trading at a premium of 17.9% to its 100-day moving average. Such a massive premium over the trading price might suggest a possible pullback in price.
The RSI (relative strength index) readings for the above four miners, as well as most other miners, have fallen considerably with the fall in the price of gold. An RSI level above 70 indicates that a stock has been overbought and could see a downward revision. An RSI level below 30 indicates that a stock has been oversold and could see an upward revision. GDX’s RSI is 47.
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