Buy on the Dip? The Short-Term Case for Silver, 'PSLV'

Silver assets like the Sprott Physical Silver Trust (NYSEArca: PSLV) have the makings of a short-term rebound play.

PSLV is a closed-end fund that lets investors redeem large blocks of shares in exchange for delivery of silver bullion.

The Trust often trades at a premium to net asset value (NAV). Closed-end funds can see large premiums and discounts, while exchange traded funds have an arbitrage feature that tends to keep prices in line. PSLV does possess some unique benefits however, and silver is also gaining momentum as long-term idea.

The declining dollar and rising inflation augur well for PSLV.

“Just in the past 12 months, from March 2020 through April 2021, the value of the dollar on the index has dropped from 98.7 to 93.1. That’s an astonishing 9.7%, in just a single year,” according to FX Empire. “The question is are you brave enough to hold on to excess cash in your bank account as its value continues to erode year after year, while collecting dust instead of interest which has been set to near zero by the Federal Reserve to hide their dirty deeds in borrowing and spending at historic levels?”

PSLV 1 Year Total Return

Is It PSLV’s Time to Shine?

Rising Treasury yields are pressuring precious metals and assets such as PSLV but silver can rise anew.

That’s the view of some market observers that believe recent weakness in the precious metal is an opportunity to get involved with silver.

The decision between owning gold and silver and holding “will determine your buying power in the years to come as politicians fight over every pity thing in Washington while our national debt and deficit continue to soar. Remember over 26% of all dollars in existence, were printed just last year alone,” reports FX Empire.

See also: Silver Drops, But Is It at a Bargain Price?

Plus, PSLV and silver pricing currently looks attractive.

“May silver futures prices are also seeing a corrective pullback from recent gains. The silver bears have the overall near-term technical advantage. Prices are still in a 10-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the March low of $23.74. First resistance is seen at $25.00 and then at today’s high of $25.33. Next support is seen at $24.50 and then at $24.00,” wrote Kitco analyst Jim Wyckoff.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.