Will Silver's Luster Last? Mon, Feb 1, 2021 Silver got off to a very strong start to February this morning as front-month futures traded up as much as 12.76% at the highs. Prices have since pulled back from those opening highs, but silver is still up around 7.5%. Another proxy for the metal, the Silver ETF (SLV) experienced a record opening gap of +11.04% this morning; the first time ever it gapped up more than 10%. The next largest gap up on record was a 7.76% gap in October of 2008. As shown in the charts below, front-month futures (based on settlement price) are now at their highest level since August 10th of last year, although earlier today it was even higher at its best level since 2013. Even after having pulled back intraday, silver futures are still on track to see a single day move in the top 1% of all days since 1975. As of this writing, silver is up 7.4% on the day. In the table below, we show the past times since 1975 that silver was up at least 7% in a single day without another occurrence in the prior six months. The last such move was the equity market bottom of the bear market last year. Prior to that, you would have to go back to 2014 to find another time that silver experienced that large of a move. Across these past instances, performance has held a negative bias. Over the following weeks and months, median returns have been negative and silver has been higher less than half the time.
Precious Metals Finding Support and Eyeing Breakouts Tue, Apr 6, 2021 After a strong run in the first months of the pandemic, gold (GLD) has been in a downtrend since the summer erasing most of the past year's move higher. While GLD is far from breaking its longer-term downtrend, the past few weeks have at least seen a bit more constructive price action with a potential double bottom forming. After trading deep into oversold territory in early March, GLD found at least a temporary bottom right around the lows of last sping's range. Last Tuesday, there was another successful retest of those same support levels. Since then, GLD has pressed higher and is getting close to breaking out of the past few weeks' consolidation range. Elsewhere in the precious metals space, silver (SLV) has generally fared better over the past several months. While it hasn't been pressing higher either, SLV has more or less been trending sideways since last summer's high. Since late February, SLV had been heading back to the bottom end of its range, but like GLD, it recently found some support. SLV took a brief dip below its 200-DMA one week ago which snapped a streak of 217 consecutive closes above its long-term moving average; the third-longest on record since SLV began trading in 2006 as shown in the second chart below. That drop below did not last long though as SLV has since moved back above its 200-day. Now, it is sandwiched between its 200-DMA and 50-DMA; which it had previously failed to move above last month. Additionally, the move higher today is breaking the short-term downtrend that has been in place for most of 2021. Like gold, the overall longer-term picture for silver has a lot of room for improvement, but at least in the near term, there are some positives developing in the past week.
Silver Gets Back in the Backseat Mon, Oct 4, 2021 Gold and silver are two precious metals typically used as investment vehicles for diversification and as a hedge against the dollar. Because gold and, to a lesser extent, silver don't have a lot of industrial utility, prices are often defined by the value the consumer is willing to pay. In times when the dollar is weakening, investors have typically rushed to 'safe havens', a category that precious metals tend to fall in. While it would be reasonable to expect gold and silver to trade similarly, that hasn't necessarily been the case over the last decade. Using the two ETFs that track the metals (gold- GLD and silver- SLV) as proxies, while they have been positively correlated, gold consistently outperformed silver from the beginning of 2013 right up through the start of 2020. The lower chart shows the relative strength of GLD versus SLV over the last 10 years. In it, a rising line indicates outperformance on the part of GLD while a falling line indicates SLV outperforming GLD. With the outbreak of COVID, gold's relative strength versus silver went parabolic in March 2020 but quickly pulled back thereafter. As optimism over economic growth surged in the months after the economic lockdowns, silver continued to outperform gold through the first quarter of this year. However, as economic expectations have started to reset as the re-opening hasn't been as smooth as originally hoped, silver has once again taken a back seat to gold. Even as both have declined over the last few months, as shown in the top chart, the drop in silver has been larger than gold. Given that it has at least some industrial utility, silver's relative strength versus gold tends to be impacted more by sentiment regarding economic growth.
