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%. This has made silver one of the worst-performing asset classes of the year behind the Solar ETF (TAN) and Palladium (PALL), with silver now among the ten worst performing ETFs year-to-date. The silver lining is that the metal is oversold short-term, and sentiment is at its worst levels in years, but while this provides the conditions for a durable bottom, the key for the bulls will be defending the $22.00/oz level at all costs. A breakdown below this level would be a bearish development for silver and silver miners. 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. Not surprisingly, this has put a massive dent in bullish sentiment readings, with silver now one of the most hated asset classes on the planet from a sentiment standpoint. 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 crude oil (USO (NYSE:USO)) 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. However, while sentiment will finally move onto a short-term buy signal on Friday, September 17th, the technical picture remains under pressure and is still just outside of a key oversold zone.