Silver Miners close to a significant bottom?
I believe at the current levels Silver Mining stocks presents a huge opportunity for the patient investor.
Let’s be honest the majority of Precious Metals Mining stocks have been terrible investments over the last couple of years, some have seen drawdowns of over 90% or more. It’s been a long slow grind lower and lower, which has been very painful for those invested in the sector. Anyone who bought in 2020 can speak to this.
I have never seen such poor sentiment in a sector before, long time metals bulls have decided to throw in the towel and go chase lithium or coal stocks. The sector is ripe with extreme negativity. Volume has basically evaporated from the stocks and even good drill results and new discoveries are forgotten.
As a contrarian investor or speculator chasing the next big win, this is the time to start shopping for the best stocks and bargain hunting. There could even be some more downside ahead, but eventually I believe that history will repeat itself and the next cycle will begin.
I wanted to share this chart of the Silver Junior Mining ETF “SILJ” versus the price of Silver. It highlights where we are beautifully.
We are in the bottom zone of the chart, we aren't quite at the 2015 bottom or Covid Crash lows yet, but we aren’t far off. Markets have ups and down over the years and the same cycles repeat over and over again. I don’t believe that this time will be any different. I could see some potential downside ahead but when the fed pivots and cuts, I think we are going to bounce hard upwards from here. When that happens is anyone’s guess.
In the event that we break below the previous lows, I would see this as a generational type of opportunity, and would be very surprised if this occurred, but anything is possible in markets. It is hard to see much more downside in alot of these names, as they are basically flat now and ready for the next launch.
It’s important not to forget what the potential is in this sector when things turn, After the 2015 bottom SILJ ran over 500% in a matter of 8 months, some of the smaller silver juniors did even better, one example would be Southern Silver which became a 20 bagger in 8 months.
Off the covid lows SILJ ran over 400% in 11 months and Southern Silver became a 10 bagger during the same time period.
I believe the current set-up is similar and that’s why it remains my focus over the next few months. This is a chart to keep an eye on and continue to monitor.
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