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Silver Fundamentals Remain Strong Despite Fed’s Hawkish Pivot

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(C) Reuters. Silver Fundamentals Remain Strong Despite Fed’s Hawkish Pivot

Silver (SLV) is down for the month and weakened significantly following the FOMC meeting. Taylor Dart breaks down why the dip could be a good buying opportunity.It’s been a rough month so far for the silver (SLV) market, with the metal down 10% in less than 20 trading days, erasing its outperformance vs. the S&P-500 (SPY). Following last week’s negative reaction to the Federal Reserve Meeting, silver’s year-to-date return now stands at a paltry (-) 1%, vs. a (+) 12% return for the S&P-500. This significant underperformance has put a minor dent in the Silver/S&P-500 ratio. Fortunately, it hasn’t inflicted any material damage to silver’s technical picture or the Silver/Gold ratio, which continues to trend higher. The good news is that we continue to track quite similar to the early 2000 analog, with the base-on-base pattern still intact. Let’s take a closer look:

(Source: TradingView.com)

If we look at the chart above, we can see that silver broke out of a massive multi-year base in 2005 and spent nearly two years going sideways before resuming its trend and making new highs. Just last year, silver also broke out of a multi-year base to new highs and has spent nearly 12 months going sideways now in a volatile 25% range. This volatile range is likely frustrating many investors, but it’s pivotal to stay focused on the big picture. Unfortunately, many weak hands are shaken out during these base-on-base setups, left exiting near the lows in the early innings of a new bull market.

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Silver Fundamentals Remain Strong Despite Fed’s Hawkish Pivot

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