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Is Silver on the Verge of a Breakout?

Stock Markets May 27, 2021 11:31AM ET
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© Reuters. Is Silver on the Verge of a Breakout?

Silver (SLV) has started to show signs of life following a poor start to the year. Taylor Dart explains why its fundamentals continue to improve and point to a strong second half.It’s been a volatile month in the markets, and fortunately, for the silver bulls, this volatility has been to the upside. In an abrupt change of events, silver (SLV) has easily outperformed the S&P-500 (SPY) over the past month, up 7% for the month of May vs. the S&P-500’s 1% return. This outperformance bodes well for the precious metals complex, but the bears have managed to keep a lid on silver, for the time being, playing strong defense at the $28.90/oz to $29.30/oz resistance level. If this resistance level is broken on a monthly close, silver has lots of room towards the $35.00/oz level. However, until we have a clear breakout, the best course of action looks to be trading the range or holding best of breed miners like GoGold Resources (GLGDF).

(Source: TC2000.com)

As shown in the chart above, SLV continues to struggle with the $26.35 - $26.70 zone, and the price of silver has been unable to get through the corresponding $28.90/oz to $29.30/oz resistance zone. The good news is that the metal does not have caution bars (orange and red bars) as it approaches this strong resistance area for the fourth time in the past two years, suggesting that the next major test of this resistance level near $29.00/oz could lead to a successful breakout. This view is corroborated by sentiment, which is shown below.

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Is Silver on the Verge of a Breakout?
 

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