Silver Could be Shining Amid the Market Gloom

To help shore up the economy, the U.S. Federal Reserve is on an asset-buying bonanza, which includes scooping up securities to keep the markets afloat. Through the gloom and doom in the capital markets amid the coronavirus outbreak, however, silver was shining in Monday’s trading session.

It’s just another reminder that risk-off is the prevailing sentiment these days.

“This means that the major flight to safety continues,” wrote Vladimir Zernov in FX Empire. “Even gold, which traditionally benefits from the turmoil as a safe haven asset, is under pressure. I continue to believe that it will be hard for silver to show material upside without a corresponding upside move in gold. Nowadays, big quantitative easing programs are announced almost on a daily basis.”

While bullish precious metals investors were wary of the extended bull market heading into 2020, most were thinking gold would be the primary beneficiary. It has been, but in other parts of the globe, silver is also in demand.

“The increased appetite on the ground in India for silver as it plumbs 11-year lows continues to be mirrored in very heavy demand for coins in Europe and North America,” said Rhona O’Connell at brokerage INTL FC Stone.

From a technical vantage point from market experts, a bearish trend for silver hints that the stock market could regain its footing after a drubbing in February and early March. Silver’s price action based on futures shows a trend to the downside, according to Kitco’s Jim Wycoff.

Silver Price Chart

Silver Price data by YCharts

“May silver futures bears have the solid overall near-term technical advantage as a steep price downtrend is in place on the daily bar chart,” Wyckoff wrote. “A bearish pennant pattern may also be forming. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $14.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $11.00. First resistance is seen at $13.23 and then at $13.50. Next support is seen at today’s low of $12.29 and then at $12.00. Wyckoff’s Market Rating: 2.5.”

ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver. For those looking for leverage, they can look to ETFs like the VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV)  and the ProShares Ultra Silver (NYSEArca: AGQ).

For more market trends, visit ETF Trends.