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Silver Fundamentals Pointing to Higher Prices | The Mesh Report

Silver Fundamentals Pointing to Higher Prices

The Gold Enthusiast May 20, 2021 Comments Off on Silver Fundamentals Pointing to Higher Prices

It’s been an incredible Q2 thus far for precious metals, with the price of silver up 18% thus far, clawing back all of its previous year-to-date losses. Notably, the metal continues to outperform gold and the S&P-500. The significant outperformance for these key ratios is generally a very good sign for not only silver but the precious metals complex as a whole. As long as this outperformance continues, we should see dips continue to get bought for silver, and the prominent silver miners and GoGold Resources (GLGDF) continues to look to like one of the best small-cap names to play the sector. Let’s take a closer look below:

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(Source: TC2000.com)

As shown in the chart above, silver has rallied back towards its highs, where it reversed sharply in early February, but this time around, the stock does not have caution bars just yet (red bars). This is because the stock spent the past two months correcting and wringing out the bullish speculators, with bullish sentiment now sitting at much lower levels despite higher prices. This suggests that silver might be able to re-test its early February high before year-end, and the continued outperformance in the Silver/Gold Ratio and Silver/S&P-500 ratio is a great sign as well. This is because it’s confirming that silver is leading when it comes to these two key ratios, typically denoting a bull market stance and a buy-the-dip environment.

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(Source: TC2000.com)

If we look at the chart above, we can see that silver has woken up relative to the S&P-500 and reclaimed a multi-year moving average, and the recent pullback did not break this moving average (white line).

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