Silver (SLV) has underperformed so far in 2021, yet in recent weeks, there signs that a bottom may be in. Taylor Dart is expecting new highs in silver and gives his reasons why.It’s been a solid start to Q1 for the precious metals space, with silver up (SLV) up more than 6% for the month, erasing most of its year-to-date gain. This rally in the metal has come at the same time as we’ve finally seen sentiment begin to cool off with readings below 30% bulls, and while the Silver/Gold ratio continues to hold up very well in the face of recent weakness. Generally, a violent correction in the metals space can be differentiated as healthy or dangerous based on how this simple ratio is acting. Given its recent strength, the odds suggest the pullback has merely been a shakeout, and new highs could be on deck before year-end. Let’s take a closer look below:
(Source: TC2000.com)
As shown in the chart above, the silver/gold ratio has had a tremendous year, continuing to make higher lows and making new highs in January. This powerful uptrend in this ratio with minimal giveback is a very healthy sign for the precious metals sector because it’s very rare that we see a new bear market in the metals complex while silver is leading. Instead, when a new bear market is on the horizon, silver typically breaks down and starts to underperform gold in an obvious manner.