Silver Stock May Test New Highs Soon


Pan American Silver stock just returned to a historically bullish trendline

Posted 6/19/20 at 12:49 p.m. ET


Silver prices were on a roll in June and are heading for their second straight week of gains. However, these gains did not necessarily translate into success for the commodities issue. Pan American Silver Corp. (NASDAQ: PAAS), which shows a deficit of 7.3% since the beginning of the month. However, if the past is a precedent, there is reason to believe that the silver stock may resume its uptrend in the coming months.

Specifically, according to data from Rocky White, Schaeffer’s senior quantitative analyst, the PAAS has just approached a standard deviation of its 40-day moving average. Over the past three years, two similar signals have occurred, with an average gain of 3% over 21 days. The month has started so strong for Pan American Silver stocks; hitting a nine-year high of $ 30.59 on June 2 and nearly tripling its March 16 low of $ 10.61. Longer term, PAAS has more than doubled in the past 12 months.

Deutsche Bank rang earlier this week with the target price rising to $ 28 from $ 24.50. There is certainly room for more bullish notes, given that five of the eight PAAS coverage rate analysts are a lukewarm “hold”. Additionally, the 12-month consensus price target of $ 29.43 is a modest 8% premium from its current level.

Options seem to be a safe game when evaluating PAAS’s next move. The Schaeffer Stock Volatility Index (SVI) of 62% is above just 26% of all other annual readings. This means that options players are currently pricing relatively low volatility expectations.

In addition, the stock is Schaeffer’s Volatility Dashboard (SVS) sits at 99 out of 100, showing that the stock has tended to beat options traders’ volatility expectations over the past year, a good thing for option buyers.

By Patrick Martin, Editor-in-Chief at Schaeffer’s Investment Research

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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