Silver managed to bounce a little in the past few days, but it remains near its recent average price of $60 for the past few weeks. So, we keep doing what wise, patient investors do: We keep digging to find the best opportunities and value and wait for the right time to buy, writes Peter Krauth, editor of Silver Stock Investor.
While oil, the US dollar, and bond yields hover near multi-decade highs, there are some encouraging signs of the health of silver stocks. The following chart looks at the Global X Silver Miners ETF (SIL) relative to the silver price.
Although it has softened in recent weeks, the ratio remains solidly above its 200-day moving average and much higher than where it bottomed in late January. In fact, gold miners (as a proxy) beat every sector in the S&P 500 Index (^SPX) in the third quarter. That’s a very big deal, as it speaks to the outstanding relative strength of this sector.
This to me is an excellent contrarian signal of negative sentiment. And that’s why some of our portfolio holdings have reached levels making them buys right now. Meanwhile, as per US Global Investors, mining stocks are essentially being ignored by investors, making up just 2% of global stock markets. That’s the lowest in 55 years.
Right now appears to be one of those times to gradually build positions in the best silver stocks.