Gold has made a decent comeback this year. As for silver, not so much. But, is that about to change?
Silver is up by a fraction of a percent in 2014 while gold's 5.8 percent gain this year is outperforming the benchmark S&P 500.
Yet for the past month, silver's 50-day moving average has been thisclose to crossing above its 200-day moving average. Many technicians would view such a crossover as a buy signal. Such a crossover occurred in gold last month though bullion has stayed roughly in a $47 range since then.
However, “Talking Numbers” contributor Richard Ross is wary of buying silver and thinks it has a huge potential downside risk based on its charts.
"It's very difficult to defend silver on a longer-term basis," said Ross, global technical strategist at Auerbach Grayson. He sees the precious metal, which was trading at around $19.57 per ounce Monday afternoon, as near an important point where a three-year downtrend is close to meeting its critical support level at $19 per ounce.
That $19 support level has been in place not only in the past year, but also when it was previously a resistance level in 2009 and 2010. Should that support level fail, silver could face a drastic decline, according to Ross.
"If we were to break below that $19 level for any period of time in somewhat of a decisive fashion, you would really be staring into the abyss of a sharp and swift decline that could take you down into the low teens, perhaps into the high single-digits, as difficult as that might be to believe," he said.
Investors who insist on buying silver now in hopes of a bounce should "keep an extraordinarily tight protective stop on that position," said Ross.
CNBC contributor Gina Sanchez said silver and gold share a common factor common beside the technicals or consumer buying in India. For Sanchez, silver's fate lies with whether the Federal Reserve Bank's Open Market Committee will continue to taper its bond-buying stimulus program.
"Right now, we're expecting that the FOMC will continue to taper," said Sanchez, founder of Chantico Global. "If that happens, you'll see a downtick in silver, not an uptick. I think that the trend and even the fundamentals would suggest that silver is headed down, not up from here."
To see the full discussion on silver, with Ross on the technicals and Sanchez on the fundamentals, watch the video above.
- Commodity Markets