While the gold price continues to consolidate inside of yet another bullish symmetrical triangle, silver is back in focus and charging above multi-year resistance at $35 to reinforce its bullish momentum.
On Thursday, the metal decisively cleared this long-term resistance level that may now serve as important support, confirming strong demand and speculative interest in year number five of fewer silver ounces being mined than consumed.
A weekly close later today above $35 would confirm a significant technical breakout, with momentum players and hedge funds set to come into this tiny sector in size.
Follow-through with a quarterly all-time high close above $37.50 later this month would open the door to $40, and a possible test of the all-time high at $50 later this year.
Historically, silver tends to follow gold on a delayed basis, then outperforms once speculative interest in the precious metal’s complex increases.
Importantly, the metal remains well below its previous all-time high of $50 per ounce set in 1980, repeated 31 years later in 2011, and is now set to catch up with the gold price. And the last time silver broke through $35, it took less than 6-weeks to reach $50.
Silver has quietly been gaining strength as gold has been grabbing all the headlines by making new all-time highs on a near-weekly basis since March of 2024.
Following a brief spike low below key support at $30 during the stock market mini-panic to begin Q2 in early April, silver whipsawed many sector players out of position as the false move took impatient traders out of the market in frustration.
Over the past several weeks, the silver price has been coiling below significant 13-year resistance at $35 per ounce, while higher-risk silver miners and precious metals juniors have been leading the metal higher.
Last Friday’s silver miner ETF (SIL) posting a multi-year closing high ahead of the metal was a tell that this $35 Maginot Line of important, long-term resistance in the silver price was close to being cleared.
As silver blew through $35 on Thursday to the upside, the higher risk silver junior miner ETF (SILJ) gapped up above multi-year resistance at $14 with huge volume.
Importantly, the Gold/Silver ratio (GSR) has quickly sank back below the key level of 100 down to 94, with silver breaking out and set to catch-up with the gold price.
In my May 16 column, I brought to readers’ attention the GSR surging to triple digits likely being a harbinger for much higher silver prices in the not-too-distant-future.
The only other time this closely followed barometer reached triple digits was during the Covid-19 panic in March 2020, when the GSR spiked to an unprecedented 124 and has been over 100 to 1 less than 2% of the time.
With gold trading at over 100 times the price of silver at the pandemic bottom, silver then launched into a remarkable rally, surging over 140% to reach 63 to 1 in a matter of months.
The next major support in the GSR is at 75 to 1. Below there, 30 to 1 was the level reached at the peak of the 2011 bull market, and 15 to 1 was reached at the peak of the 1979-80 bull run.
The move above 100 to 1 in 2020 proved to be an incredible buying opportunity in the beaten down junior space as well, which has also lagged gold until recently.
With precious metals miners showing signs of being technically over-extended, after both GDX and GDXJ more than doubled over the past 18 months, investors are moving down the food chain into under-owned and undervalued juniors.
Nevertheless, despite bullion's epic run since an historic 13-year cup & handle breakout in March 2024, both gold and gold miner ETFs continue to be an afterthought for the average investor.
A telling ETF Market Share of Gold ETFs vs All ETF Assets chart, and an ETF Market Share of Gold Miner ETFs vs All ETF Assets chart here from Topdown Charts, shows generalists have yet to fully embrace this precious metals bull market.
Meanwhile, the weekly Canadian TSX-Venture chart (CDNX), where 50% of its holdings are small-cap junior resource stocks, has broken out of a huge accumulative 3-year base.
Although the TSX-V has been making 52-week highs along with the miners, it remains over 78% below its all-time high reached in 2007 and nearly 40% from its highs seen in 2021. And that is in nominal terms, not inflation-adjusted terms.
Following a spike low at 330 in early 2020, the TSX had tripled in just one year. A similar move back to the peak at 1113 in January 2021, would be a 75% rise from the recent breakout at 640.
With the tiny junior sector being unloved, undervalued, and under-owned for the past decade, higher-risk/reward quality small-cap issues can quickly result in doubles, triples, and even 10-baggers along the way.
At Junior Miner Junky (JMJ), my subscribers and I have accumulated shares in a basket of quality gold, silver, and copper related juniors, ahead of the recent major breakout in the mining sector.
Several have risen 2x-7x over the past 12-months, with others having recently begun to catch up to the outperformers as sector rotation from high-flying miners and royalty/streamers has been taking place since early-April.
The JMJ weekly newsletter is a one-stop shop for precious metals stock speculators. Along with providing detailed macro commentary and technical analysis for subscribers following the real-money JMJ junior portfolio, the letter also teaches its members risk management via successful selling strategies.
If you require assistance in accumulating the best in breed precious metals related juniors, and would like to receive my research, newsletter, portfolio, watch list, and trade alerts, please click here for instant access.
