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Przemyslaw Radomski, CFA
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Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same. His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the... More
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  • Sunshine Profits: Silver Stocks Vs. Palladium 0 comments
    Oct 31, 2012 3:11 PM | about stocks: GLD, SLV, GDX, UUP, UDN, SPY, DIA, DGP, DZZ, DGZ, UBG, UBM, USV, PTM, PTD, JJM, JJN, IAU, GDXJ

    Silver Stocks vs. Palladium

    Before making any investment decision it's usually good to look at the situation from different perspectives and make sure that the action that you are about to take is really justified. In fact, the same is the case with any other decision as well. In the precious metals market the analysis of gold is usually supplemented by the analysis of silver and gold stocks. At times, analysts focus on other markets that often influence metals: currencies and the general stock market. Some look for hidden details in the analysis of ratios and at times they look at even less popular charts (on a side note, just because something is not popular doesn't mean that it's less relevant for the analysis).

    Today's essay will feature two parts of the precious metals market that are covered relatively rarely: palladium and silver stocks. We will compare their performance and explain what each of them currently tells us.

    Let's start with palladium (charts courtesy by http://stockcharts.com.)

    On the above chart, we see further bearish indications that declines in precious metals prices are not yet over. A head-and-shoulders pattern completed here recently but palladium (NYSEARCA:PALL) has not moved close to its target level yet. Target levels are based upon the size of the head in the pattern and these patterns are usually quite reliable for this metal (as opposed to what we see on the silver market where significant head-and-shoulder patterns are practically nonexistent).

    The implications here are bearish for the whole precious metals sector. Will this really translate into lower prices for mining stocks as well as metals?

    We have already written that precious metals mining stocks may outperform the underlying metals in the weeks to come. Now we would like to analyze a chart that has never been included in our free essays before and that further reinforces our previous comments in this matter.

    The above-mentioned, new chart is the long-term Global X Silver Miners chart, an ETF (NYSEARCA:SIL) that resembles an index of large and liquid silver mining companies and hence it provides an insight into this sector as a whole. The silver stocks should provide confirmation or invalidation of points made in our earlier analysis of the palladium price. At this time, the silver stocks have a more bullish picture than any other part of the precious metal sector. The October 2012 correction is barely visible - actually, some sideways trading has been seen when silver declined, not a decline.

    There really hasn't been a decline to speak of when compared to the moves to the downside for platinum, gold stocks and silver itself. Indications coming from volume are very strong as well, with higher prices accompanied by high volume and declines seen on low volume. All-in-all, the situation is very favorable for silver stocks and the rest of the precious metals with respect to the medium and long term -based on the above chart alone. This chart does not provide any short-term indications, though - at least we didn't find any meaningful short-term signs.

    Summing up, the implications of the palladium chart for the whole precious metals sector are rather bearish for the short term, as the chart indicates that the current correction is not over yet. We have also seen a confirmation of the strength of the precious metals mining stocks. It seems that silver stocks will outperform precious metals and other miners in the future.

    The correction in metals may not be over yet, but it looks like it's over in case of the mining stocks, at least in terms of price.

    In order to make sure that you won't miss any of our free essays, we strongly suggest that you sign up for our gold & silver investment mailing list. Sign up today and you'll also receive 7 days of access to our premium updates, market alerts, premium charts and tools. You'll also receive 12 best practice e-mails as a starting bonus.

    Thank you for reading. Have a great and profitable week!

    Przemyslaw Radomski, CFA

    Founder, Editor-in-chief

    Gold & Silver Investment & Trading Website - SunshineProfits.com

    * * * * *

    All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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