Will Ailing Miners Lead Silver Prices Lower?

At the end of August, I wrote pointed out that Silver futures prices were not keeping pace with Gold.  I posited that the “gold breakout” that precious metal bulls were losing their heads about might not be ready for primetime.

You can read that post here.  I was a week and a half early, but since then Gold (NYSEARCA:GLD) and Silver (NYSEARCA:SLV) have lacked any upside follow through. If anything, the action has been mildly bearish.

Today I want to provide an update on the precious metals sector, and specifically Silver.  We’ll also detour to check in on the silver miners as they may be trying to tell investors something.

Here is a look at Silver Futures as of Friday’s close:

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silver futures prices bearish down trend lower_news_investing_november 14

Over the past 10 weeks, there hasn’t been many reasons to own Silver, especially below this base it is forming. It is also worth noting that producers and users have not changed much of their short position.

silver futures cot report specualtion commercial buyers_november
Silver Futures COT chart. Source: FreeCOTData

What Are Silver Miners Telling Investors?

While Silver continues to trade sideways, it is the charts of individual silver miners that I have my eye on. Unless the price action turns around asap, I find it hard not to be bearish on the sector.

I chose to show two Silver Miners (NYSEARCA:SIL) that I feel have been some of the strongest in the group including Coeur Mining (NYSE:CDE) and Hecla Mining (NYSE:HL). Here they are:

Coeur Mining (CDE) Stock Chart

coeur mining stock chart cde price support buy_investing_news_november 14

Hecla Mining (HL) Stock Chart

hecla mining stock chart hl breakdown lower prices_bearish_news_investing_november 14

These two stocks have had runs of 800% and 300% between February and August in 2016 followed by constructive consolidations. They are now resolving to the downside and it does not look bullish.

Miners should lead the metal. If they continue their move lower, what can we expect from Silver going forward? Time will tell but Silver may follow the least resistance path:  down.


Twitter:  @AlphaEyeCharts

The author does not have a position in any mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.