Silver 1 OZ 999 NY (XAG=X) great buying opportunity before it continues its ascent
Gold has had a bit of a pullback the last month, which has investors wondering if this is the top or just a pause and a great buying opportunity before it continues its ascent.
Another topic on investors’ minds is the status of silver. Silver tends to follow the same trends as gold, however, with more volatility, so if this is just a pause in a longer-term bull run, then how will silver fare over the long run?
The gold and therefore silver rally doesn’t look to be over, although it may have a prolonged pause due to a decent earnings season and the potential for a U.S-China trade deal, eventually the precious metals will continue their ascent.
With the levels of debt globally at all-time highs, it’s only a matter of time before the price of gold and silver get bid up by investors who are concerned about inflation and looking for a hard asset with intrinsic value to store their wealth in.
As this appears to be just a temporary opportunity, let’s look at two silver stocks to consider buying before the inevitable rally continues.
The first company to consider is First Majestic Silver Corp (TSX:FR)(NYSE:AG), a mining company with operations solely in Mexico, the world’s largest silver producing country.
Within Mexico it currently has six silver producing mines, in addition to its three advanced stage development projects and one exploration project.
Its goal is to become the world’s largest primary silver miner, currently it derives about 60% of its revenue from silver and 33% from gold with the remaining made up of other miscellaneous base metals.
Its production growth is extremely impressive. Just 10 years ago in 2009, the company produced roughly five million silver equivalent ounces. In 2019 it’s expecting to do roughly five times as much with expectations of approximately 25 million silver equivalent ounces.
It expects to have all-in sales cost this year of between $13 and $14, which is extremely attractive and leaves huge margins for increased profitability.
It’s been the top silver performer for the past decade and with a number of upcoming catalysts, it continues to offer exciting opportunities.
The second stock to consider is Endeavour Silver Corp (TSX:EDR). Endeavour is significantly smaller than First Majestic, with a market cap of roughly $440 million versus First Majestic’s near $3 billion market cap.
Similar to First Majestic, Endeavour also operates only in Mexico. It has four silver producing mines, one development project and six exploration projects.
Roughly 55% of its revenue comes from silver and the other 45% comes from the sale of gold.
It has an extremely strong balance sheet with nearly $50 million in working capital and no debt as of September 30.
The financial strength gives it plenty of flexibility, and with its development and exploration projects, the company will have plenty of runway for growth for the foreseeable future.
In the first nine months of 2019, it already produced more than 3 million ounces of silver and more than five million ounces of total silver equivalent.
Its experienced management team have been running it well and it now stands as one of the top mid-tier precious metals producer in the world.
Both companies offer incredible growth potential, especially as the market for silver experiences large gains.
On top of the natural rally in precious metals that is bound to materialize, as debt and inflation fears creep back into the market, the demand for silver will also continue to increase as its industrial demand continues to grow, which will serve as a huge catalyst for years to come.
Positioning your portfolio now is the best way to take advantage.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 17.28.
The projected upper bound is: 17.70.
The projected lower bound is: 16.15.
The projected closing price is: 16.92.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with PREC.M.XAG=), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 51.7278. This is not an overbought or oversold reading. The last signal was a buy 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 38.87. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 51 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -67. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 7 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.063 at 16.949. Volume was -0% below average (neutral) and Bollinger Bands were 6% wider than normal.
Open High Low Close Volume___
17.012 17.031 16.790 16.949 0
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 17.17 17.63 16.13
Volatility: 24 28 24
Volume: 0 0 0
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAG= is currently 5.1% above its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bearish on XAG= and have had this outlook for the last 5 periods.