Silver Lining

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.