SLV – While the general markets have had a turbulent start to 2022, it’s been a much better year for precious metals, which have flipped from massive underperformance to outperformance in 2022.
While the general markets have had a turbulent start to 2022, it’s been a much better year for precious metals, which have flipped from massive underperformance to outperformance in 2022.
The last time it reclaimed this moving average was in late July 2020, and while it was short-lived, silver’s forward 6-month return came in at more than 10%, while its forward 6-month draw-up came in at more than 30%.
Obviously, history does not have to repeat itself, but it is pretty clear that over the past 20 years, silver tends to perform much better when it’s above this key moving average relative to QQQ.
This is based on just 2/5 of market participants being bullish based on silver’s long-term moving average, which is what we witness in deep cyclical or secular bear markets.
Given that investors were extremely bearish just six months ago, I would not be surprised to see a swing to extreme greed in the next 12-18 months, which would propel silver back above the $30.00/oz level.
As shown above, silver continues to have strong support at $22.00/oz – $22.40/oz and continues to make higher lows since its double bottom in December.
In Skeena’s case, the company is looking to restart one of the highest-grade precious metals mines in history in British Columbia, and its project has an after-tax internal return north of 65% at current metals prices.
Given the volatility in the precious metals sector, position sizing is critical, so when buying small-cap precious metals stocks, position sizes should be limited to 5% or less of one’s portfolio.
Taylor has over a decade of investing experience, with a special focus on the precious metals sector.
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