After the last 12 months of craziness traders can be forgiven if they've become inured to moves in precious metals. To those who swore off semi-precious silver last summer it's time to rue the day: Silver has rather quietly staged a more than 20% rally since the beginning of 2012.
According to Michael Purves, chief market strategist at BGC Financial, silver is apt to warrant more attention. "Silver is a poor man's gold and it's also very volatile," he says. "I think a lot of that volatility will be skewed to the upside".
And by "upside," he means a move to all time nominal highs. The semi-precious is "setting up for something more powerful; we could see $50 later this year," he states.
To support his case Purves notes the encouraging price action since last May when silver pushed that same $50 level before collapsing hideously. The bright side of that sell-off is that silver never returned to whence it came before going parabolic at about $19. A true bubble would have taken back all the gains; silver may still do so but at least for now it remains almost 70% higher than it was in September of 2010.
The drivers for a move higher are silver's status as a hard money and industrial demand. In a world of systemic currency abuse and slow yet positive growth, silver wins, at least as Purves sees it.
For those more equity inclined Purves suggests looking into the gold and silver miners. Since the stock market bottom made three years ago last week, the Market Vectors Gold Miners ETF (GDX) has gained about 60%. That's a terrific gain unless its compared to the S&P 500's 100% gain or the 150% move in silver itself.
"It's only a matter of time" until that performance spread tightens says Purves, noting the positive technicals and tight range in which the GDX has traded. The fact that the same could be said of many things and most of them are unpleasant doesn't dissuade Purves. He likes the miners and is willing to wait, provided he can do so while holding silver.
Watch the tape, mull the charts and consider Purves' sterling track record with Breakout then tell us what you think, either via a comment below or Tweet me @Jeffmacke