Friends and family are blowing up my phone (and this time, it’s not just about baby pics). They’ve noticed gold’s rally to new highs – and they want to know whether to buy physical gold or an ETF — bars or coins.
But silver has yet to enter the conversation…
I get it. New all-time highs have a way of capturing the investor’s collective conscience.
But while gold is printing new all-time highs, silver futures post a mere multi-month high.
I’m no fan of the catch-up trade, as I always want to own the strongest name(s), but check out silver’s four-decade base:
What a monster!
Silver reached its peak in early 1980 at roughly 41.50. The bulls didn’t see that level again until the spring of 2011 when price ran just shy of 50.
Spring is ahead today, and the soft, shiny metal is trading at approximately 25. That means it would have to double before hitting a new all-time high.
I’m not waiting around for silver to complete this half-century base.
Here’s how I want to play it…
A significant confluence of resistance jumps out on the weekly chart:
A multi-year downtrend line, a critical retracement level, and the neckline of an inverted head and shoulders pattern converge at approximately 26.
I plan on riding silver’s next wave higher, but not until buyers absorb the overwhelming supply.
Last year’s high of 26.44 marks our line in the sand:
A break above those former highs flashes a buy signal with an initial target of 35. But price must close above our breakout level for the trade to remain valid.
I will not hold silver below last year’s high.
The Silver Trust ETF $SLV also provides an excellent trading vehicle:
A buy triggers on a daily close above 23.50 with an upside objective of 35.
If silver is printing fresh highs, so will the companies mining silver.
Check out this $950M Canadian silver miner, SilverCrest Metals $SILV:
SILV is building a multi-year base below a key extension level at approximately 6.80. Price has straddled that level since early 2022, so I’ll give a breakout additional room.
I like buying SILV on strength above 7.00, targeting 10.50 and 16.50 over longer time frames.
Investors are catching on to the new secular bull market in precious metals. Gold’s new all-time highs make it nearly impossible to miss.
Other areas of the precious metals space — palladium, platinum, silver, and mining stocks — demand a bit more imagination.
I can see those future uptrends unfolding as new all-time highs spread. But I choose to focus on today’s risk levels instead.
