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Silver Guides Gold?
"Silver leads gold", a well-known adage in the precious metals market, is playing out as we speak. Currently, silver is witnessing a decline with recent market trends showing the metal touching yearly lows.
The saying suggests that silver usually forecasts the trends for gold. Although there are exceptions, especially when silver outpaces gold just before local market peaks, it seems silver investors are currently responding to deviations that aren’t being recognized yet in gold or stock markets.
Interestingly, those in mining stocks might have sensed these shifts all along.
Downward Spiral for Miners
What does this imply? Primarily that miners' market shares have noticeably fallen and have been underperforming gold for a while now, from both short-term and long-term perspectives.
Returning to silver, this metal, signified as white, has reached new lows this year, a trend that is consistent with market expectations and predictions.
Not only has silver breached its rising support line, but by doing so, it accomplished its head-and-shoulders top structure. It is common for such formations to give rise to pauses, corrections, and/or rearrangements. Then it slips once again, exactly as we've seen with silver recently.
The Future Looks Bleak for Silver
The downward trajectory of silver is likely to persist, with projections placing it near the 2023 low – around $21.
Similar patterns are also evident in the junior mining stocks. These trends, combined with the current dip in commodity prices, hint towards a lack of significant industrial demand, implying lower sales, and subsequent weaker revenues and profits. This ultimately implies lesser stock evaluations, particularly when the interest rates haven't plunged yet.
If and when stocks take a significant tumble, silver and junior mining stocks are likely to feel the brunt. Judging by recent pre-market trading activities, silver seems in a hurry to hit new lows. Evidently, it looks like mining stocks will follow suit, potentially expanding profits on short positions in junior miners.
