It’s been another rough week for the precious metals sector, with the price of silver (SLV) plunging more than 4% to undercut the $23.00/oz level, extending its year-to-date losses to nearly 14%. Taylor Dart explains why the metal needs to hold its support level.It’s been another rough week for the precious metals sector, with the price of silver (SLV) plunging more than 4% to undercut the $23.00/oz level, extending its year-to-date losses to nearly 14%. The result has been that silver is one of most inefficient asset classes, trailing the Solar ETF(TAN) and Palladium ETFs (PALL), making it now the ten poorest performing ETFs. Although the silver lining here is that sentiment is low and the metal has been oversold, it is still possible to see a bottom. But, bulls need to defend $22.00/oz as the foundation of their strategy. For silver miner and silver traders, a fall below that level will be bearish. Let’s take a closer look below:
(Source: Daily Sentiment Index Data, Author’s Chart)
Despite some of the highest inflation readings in a decade, the precious metals have been anything but a sanctuary, currently registering as the worst-performing asset classes of 2021. As you can see, silver is now the most disliked asset class on the planet. This is evidenced by silver’s long-term moving average for bullish sentiment dipping below 24% this week, the lowest reading for this indicator in nearly three years. The last time an asset class became this hated was (USO (NYSE:)) in April 2020, and while oil headed 5% lower, April ended up being a major bottom for the commodity. There’s obviously no guarantee that history repeats itself with silver, but when an asset becomes this detested, it’s wise to be open-minded for signs of a bottom. Although sentiment may finally shift to a buy signal for the short term on Friday September 17th (the technical picture is currently under pressure) and remains just outside of an oversold area, it’s still possible that there will be a trend change.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Trading the financial markets is one of most risky investment options. Please make sure you are fully aware about the costs and risks involved.