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Silver Stocks vs. Palladium

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At this time, the silver stocks have a more bullish picture than any other part of the precious metal sector.

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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, such as currencies and the general stock market. Some look for hidden details in the analysis of ratios; at times, they look at even less popular charts. (As 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 of 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 was 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-shoulders 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?
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No positions in stocks mentioned.
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