Omar Ayales Eyes a Silver Lining

05/22/2020 5:00 am EST

Focus: COMMODITIES

Omar Ayales

Editor, Gold Charts R Us

Not only is silver following gold on its safe haven rise, it’s also showing added support from resources as they jump up from extreme lows. Silver is showing great potential that cannot go unnoticed; indeed, silver is following gold's safe haven rise, asserts Omar Ayales, editor of Gold Charts R Us.

Silver broke above its 5-week moving average. It’s showing upside potential. Technically, silver is coiling at the bottom side of a sideways band since 2015.

The chart is bullish and suggests the downside is limited and some upside is likely. Our upside profit target is above $19. If silver fails, however, and falls below $15, more downside pressure would be likely.

Silver mining shares have also been looking good. They’re showing more upside potential than gold shares. They’d been lagging gold shares too.

Silvercorp Metal (SVM) a low‐cost silver producer that’s slowly merging into a more diversified production within precious metals and a traditional silver mine with increasing exposure to gold mining.

SVM just recently broke above resistance at $4. It’s showing upside potential above $3.80 but is still struggling to surpass the downtrend since January at $4.20.

Consider SVM must break above this level to show renewed strength. If it fails and falls back below $3.80, a decline to $3 initially would be likely.

Hecla Mining (HL) is also showing strength. It recently broke above a key resistance at $2.50 and it's held above that level. Indeed, Hecla has held up better than most silver miners given its recent pivot to increasing gold production.

I’m also adding a new position to our recommendations — Fortuna Silver (FSM). It’s a low‐cost silver miner with operations in Peru and Mexico. More recently FSM started developing a gold project in Argentina.

FSM has amazing proven silver and gold reserves that far outweighs the value of the stock. Trading FSM is a cheap way of having exposure to silver.If you’re not exposed to silver shares, consider buying some at market and more on a dip below $3.

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