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The Virtue of Patience With Silver ETFs

With the iShares Silver Trust (SLV) and the ETFS Physical Silver Shares (SIVR) down an average of 8.6% over the past month and both having hit new 52-week lows on Monday, a cursory glance of silver and silver exchange traded funds would seem to indicate a buying opportunity its afoot.

A buying opportunity in volatile silver and the aforementioned ETFs may eventually materialize, but investors would do well to examine the charts and realize that patience is likely to indeed be a virtue when it comes to the white metal.

The chart featured at the end of this piece “was created when Silver was trading at $28 per ounce. I shared with Premium Members in June of 2012, that Silver looked to be creating a bearish descending triangle and the measured move was calling for Silver to hit $15 per ounce (see projection of red arrow above). Since the chart was made, Silver is down 40% in value and is nearing the projected price of the descending triangle,” according to Chris Kimble of Kimble Charting Solutions.

Translation: Investors eager to catch the falling knife that is silver probably ought to wait until $15 is seen. That is more than 12% below where SLV closed on Monday. Importantly, this is not the first time the $15 area has come up in the silver conversation.

Earlier this month, Eagle Bay Capital President and founder J.C. Parets, said his downside target for silver is $15. SLV is down almost 5% since Parets published his analysis of silver prices on Sept. 11. [A Slide Awaits Silver ETFs]

Kimble notes that he has been advising members of his service “that the $15 zone in Silver looks to be an interesting place to pick up some silver.”

Perhaps stubbornly, investors continue to stick with silver ETFs despite the obvious, recent weakness. SLV is down 7.2% since the start of September, but the ETF has also added $170.6 million in new assets over that time. By comparison, nearly $729 million has been pulled from the SPDR Gold Shares (GLD) . [Stuck With Silver ETFs]

Silver Chart


Chart Courtesy: Kimble Charting Solutions

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.