2 Stocks Leading the Precious Metals Sector Higher

Among the red-hot precious metals stocks of late are Silver Standard Resources Inc. (USA) (NASDAQ:SSRI) and Agnico Eagle Mines Ltd (USA) (NYSE:AEM)

by Alex Eppstein

Published on Oct 9, 2015 at 10:14 AM
Updated on Jun 24, 2020 at 10:16 AM

Precious metals have been in focus of late, as gold chops around a number of key levels. In terms of individual equities, of the 21 we follow at Schaeffer's, two-thirds are hovering above their respective 80-day moving averages -- tied for the highest percentage of any sector we track. Yet, the shorts are out in force. The typical short-interest ratio among the 21 aforementioned precious metals stocks is 12.4, indicating it would take over two weeks to buy back these positions, at typical volumes.

Of course, not everything's coming up roses, as evidenced by the performance of the Market Vectors Gold Miners ETF (NYSEARCA:GDX). The exchange-traded fund (ETF) sports a year-to-date loss of roughly 15% -- though it's soaring 3.5% out of the gate at $15.96, following yesterday's release of the Fed minutes.

What about individual stocks? Overall, it's a mixed bag; but this morning, we'll take a look at two outperforming precious metals stocks: Silver Standard Resources Inc. (USA) (NASDAQ:SSRI) and Agnico Eagle Mines Ltd (USA) (NYSE:AEM).

SSRI sports an impressive 39% year-to-date advance at $6.94 -- including today's 0.4% gain. Helping the equity on its quest northward is its 10-month moving average, which has served as support since May. On a relative-strength basis, in fact, the stock has outpaced the broader S&P 500 Index (SPX) by 16.5 percentage points over the previous 60 sessions.

Nonetheless, pessimism runs high on SSRI. The security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.72 ranks in the 94th percentile of its annual range. On top of that, 7% of Silver Standard Resources Inc.'s float is sold short -- representing a week's worth of pent-up buying demand, at typical volumes. In other words, a capitulation among these skeptics could usher the shares even higher.

Meanwhile, AEM is up 3.1% today at $28.34, bringing its 2015 gains to 13.9%. The stock is now on track to end atop its 50-week moving average for the first time since late May.

The upward momentum could send option bears running for the hills -- potentially resulting in tailwinds. Agnico Eagle Mines Ltd's 50-day ISE/CBOE/PHLX put/call volume ratio stands at an annual high of 0.41. In other words, traders have never displayed a greater appetite for bearish bets over bullish, looking back 12 months.

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