Silver Completes Cup And Handle Breakout

Today was the breakout in the silver market that I have been looking for since the end of last year. High volume backing from SLV, lots of inflation talk in the mainstream media, and a long candlestick which not only broke out of a cup and handle formation, but made a new 30 year high as well.

At the end of January, I told you once or twice that the bottom had been put in the silver market. Well here’s where I say I told you so to anyone who was bearish. Today’s move was a clean and decisive break of resistance. Silver continued to power forward and was met with no selling pressure throughout the entire day. I played off of the momentum and increased silver related positions on Tuesday but today is the official buy signal as $31 will likely act as support from here on.

The volume behind SLV today was about a 3 week high and it managed to stay above $31 in the final minutes of trading as it made a new all time high. Usually when a stock reaches intraday highs like this, it’s followed by selling pressure which leaves a wick on the top of the candle after the extreme highs are rejected but that was not the case today as it was all bullish all the way through.

What’s worth noting is how the producing sector has immensely lagged spot price. Not just juniors, but benchmark miners are well behind relative to the last time silver peaked.

While SLV made a new all time high and spot silver made a new 30 year high, these benchmark silver companies along with other juniors still have catching up to do in the short term:

Established Companies

Ticker – % from Jan 1

SLW – 8%
PAAS – 16%
SSRI – 9%
HL – 11%

Junior Producers

Ticker – % From Jan 1

AG – 17%
AXU – 9%
BCEKF – 13%
EXK – 7%
RVMID – 15%

There are plenty of others that are lagging as well. Some, like Great Panther (GPL) are keeping up with spot due to news regarding their company that is unrelated to supply/demand in the silver market. All of the companies listed are a screaming buy but from an investment standpoint I prefer SLW, GPL, AXU, BCEKF, RVMID, and AG.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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