Happy New Year! After scoping out some Gold Miners in Surf Reports 1 and 2, we would be amiss to not review Silver miner waves at Silver Beach. Silver itself has a tendency to outperform Gold later in a Precious Metals bull market and Silver miners in turn have a history of outperforming silver itself. We saw hints of this already with Wheaton Precious Metals (WPM), SSR Mining (SSRM), and Pan American Silver (PAAS) having the potential for explosive performance going forward. Let’s go check some others out! Like before we’ll begin by looking at some top holdings in a few of the highly traded Silver miner exchange traded funds as well as the ETFs themselves. In this report we’ll look at the Global X Silver Miners SIL ETF. As you can see from the funds top holdings list in the link, we’ve already covered a number of names in SUrf Reports 1 and 2 (WPM, PAAS, SSRM, Industrias Peñoles, and HL). In this report we’ll fill in the blanks which will give us a set of 15 of the top holdings which represents over 87% of the funds portfolio weighting.
Are you feeling as amped up about this as I am? Let’s paddle out.
Global X Silver Miners ETF, SIL
First lets look at the SIL ETF itself. Here we see a messy ABC for Primary wave 1 initiated from the 2016 low with a false breakdown of the backtest from the declining trendline to complete Primary 2. A Primary wave 3 would bring price 260%+ higher over the next decade using standard 1.236-1.382 Fibonacci extensions for wave 3. I find this interesting as I would have thought this would have been higher given what we saw in Surf Reports 1 and 2 with some of the gold miners making 5x gains in price. Wave 3s don’t always have to stop at the 1.382 and sometimes extend higher. I wonder if that will be the case here. Lets look at the top holdings of SIL to see if we can make some sense of this.
Korea Zinc
Korea Zinc engages in the manufacture and sale of non-ferrous metals and produces Zinc, lead, Gold, Silver, sulphuric acid and others. I was surprised its actually a top holding in a Silver Miner ETF given that Silver is only 25% of the companies revenue. After a loooong Intermediate wave (2), price appears to be in the heart of an Intermediate (3) of Primary 3 that keeps charging higher. Note that I’m using non-log scale Fibonacci extensions as they fit more reasonable within the current Primary structure. This is one of the tricky aspects of Elliott Wave Analysis; which degree extension to use. Use best judgement here and let price action tell you which one may be more valid. Consider them all and be flexible to change. If price takes off aggressively here I would be inclined to think higher extensions will occur.
Fresnillo, FRES.LSE
Fresnillo is the world's largest producer of Silver from ore (primary Silver) and Mexico's second-largest gold miner. Primary wave 2 where price consolidated for nearly 8 years found support at the 50% level. If we use standard Fibonacci extensions for the Primary degree price would climb 24x over the next decade. This would also assume that the Intermediate degree (3) and (5) in blue would extend beyond the standard extensions which is typical of miners. We’ll need to revisit this longer term view once we find out how high Intermediate (3) extends.
Buenaventura, BVN
Buenaventura S.A.A. is Peru's largest publicly-traded precious metals mining company. The company also owns over 19% of Sociedad Minera Cerro Verde, an important Peruvian copper producer in a partnership with Freeport-McMorRan Inc. and Sumitomo Corporation. This chart surprised me with the upside potential. Like Fresnillo we are again assuming higher extensions for (3) and (5) to reach Primary wave 3 standard Fib extension targets. Note that the price structure off Intermediate (2) has not been impulsive so there is still risk here to see a lower low that could possibly fall deeper than Primary 2. This would result in a reset of the the start of Primary wave 3. This is one to watch if it continues up here! Peruvian Silver waves for the win perhaps?
First Majestic, AG
I previously showed First Majestic’s long term structure in Part 10 of the U21CSD Series. My Primary count has not changed but I now think its best to expect Primary 3 to unfold as a 5 wave structure in the Intermediate degree and (1) of P3 can be counted as impulsive. I also added larger degree Fib extensions for Cycle I-II. This is one heck of a I-II, P1-P2, (1)-(2) setup if I have this count right! As every surfer strives to get right of the middle of the long lasting tube, every Elliott Wave Surfer seeks to ride the heart of a wave 3.
MAG Silver, MAG
MAG Silver has a great looking Primary 1-2, Intermediate (1)-(2) setup here with a chance to break out of its longer term base / price channel. Given where I expect Silver to go, its again reasonable to believe MAG has a great shot at following higher Fib extensions for its Primary degree count which will line up with standard Fib extensions in the present Intermediate degree wave structure. It will definitely be exciting to see this break out to new all time highs above $25/share.
Fortuna Silver Mines, FSM
Fortuna Silver Mines made an all time low in March 2020 which reset its count entirely. Assuming the low for Intermediate (2) confirms we can assume a 5 wave Intermediate structure that could carry price 13x higher from its current level for standard Fib extensions. The price channel as I’ve shown will need to prove itself and higher extensions are possible.
Coeur Mining, CDE
Coeur Mining, CDE had a very deep Primary 2 retrace from the 2016 high. Just looking at the chart it has had many explosive rallies and declines. It also appears to be making a multi-decade rounded bottom. This is one Primary wave 3 to watch and hitch a ride on if we see a constructive price structure forming. We may need a tow-in though given how fast it could run. Let’s try not to wipeout if we do!
Silvercrest Metals, SILV
Silvercrest Metals, SILV is making a long term upward price channel and also appears to also be in a Primary 1-2, Intermediate (1)-(2), Minor 1-2 setup provided that the recent low is confirmed. It also has Fibonacci extensions that line up well with each other between the Intermediate and Primary degrees. A clean wave to catch here in a Primary 3.
Endeavour Silver, EXK
Endeavour Silver was my very first Silver miner position when I began to invest in the precious metals sector in the summer of 2010. Since I only knew how to surf ocean waves made of water and not Elliott Waves made from Fibonacci and patterned herding, I held on to my shares a bit too long and got stuck in Primary 2’s “washing machine”. After learning how to surf Elliott Waves I loaded up heavily with more shares during 2017-2019 timeframe and got a much better ride as Primary 3 began. I am now focused on catching Intermediate wave (3) of Primary 3. Again I am looking for higher extensions in the Primary degree based on where standard Fib extensions for the Intermediate structure are settling off the (1)-(2). Do you “endeavor” to catch this potential bomb wave as I do?
Aya Gold and Silver, AYA.V
Our final chart is Aya Gold and Silver which had a multi-year base long base forming Primary 2. There is an saying that the “longer the base the higher the space” which proved to be true in AYA.V. Its now forming a 5 wave Intermediate degree wave structure inside a powerful Primary 3. Notice how Intermediate (3) extended all the way to past the 1.786 Fib level. This implies a higher extension for (5) is possible and much higher extensions for Primary 5 as well provided it doesn’t truncate. Truncation is always a possibility after a big wave 3. Very clean, very powerful waves here. Hang ten for another 20x from the current price if the wave structure doesn’t get blown out in truncation.
Summary
We have some pretty interesting results here I would say. Most every holding in SIL has much higher upside for standard Fibonacci extensions in the Primary degree than those in the ETF itself. This makes me believe either reweightings or position adjustments could hurt the funds performance. Otherwise higher extensions should be expected. We will have to wait and observe. There are definitely some standouts here in the Silver miner SIL lineup. I personally am surfing the EXK, AG, and HL waves right now but am definitely keeping an eye on many of these (particularly BVN, SILV, AYA, and CDE) as price and wave structure progress.
For reference and completeness (and due to space limitations for this report to fit into a single email), I’ve included links to the charts we’ve covered previously that have been updated with latest pricing data:
Wheaton Precious Metals WPM Pan American Silver PAAS SSR Mining SSRM Industrias Penoles PE_OLES Hecla HL
We’re not quite done with Silver beach! For the next report we’ll look at some junior silver mining companies in the top holdings of ETFMG Prime Junior Silver Miners ETF SILJ. We also have Energy, Commodity, and Emerging Market beaches to visit too.
Cheers and #EndTheFed!!
-Hypersonic78
Disclaimer: None of this is financial advice. Please do your own diligence. The views expressed here and other surf reports are my own. Only risk what you can afford to lose in these crazy markets.
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