Many people have been talking about how gold prices plummeted last year. With a 29% loss in 2013, gold recorded its worst annual price decline since 1981. Meanwhile, fewer people seem to notice how silver prices got destroyed — down by more than 37%!
Year to date gold prices rebounded about 6% whereas silver prices are down almost another 2%. At this point, silver looks very oversold. While there could be more downside from here, it seems highly unlikely that another 40% haircut is in the cards.
Beyond a short-term technical bounce, silver may also be a good hedge against the all-time highs we’re seeing in the stock markets. With each new market high, the odds of a correction or pullback rises. When that happens, this semi-precious metal may be one of the few silver linings around.
Victor K. Lai, CFA
Disclosure: Victor Lai is long SIVR. This blog is for informational purposes only. Nothing on this blog represents advice. Investing is inherently risky and involves the potential for loss.