The current setup for silver (XAGUSD) and the iShares Silver Trust (SLV) is a classic example of a high-risk, high-reward coiled spring. Following a parabolic run in late 2025 that saw silver prices breach the $100 level for the first time in history, the metal underwent a violent correction to the $67 range early this year.
This move effectively shook out the "froth" and created a reset for silver stocks. Now, silver is setting up for a big follow-on move. But will it be up or down? Let’s study the charts, and then examine the bull and bear cases.
A Closer Look at SLV
I’ll start with SLV, which owns silver metal, before moving on to GX Silver Miners ETF (SIL), which owns silver mining stocks. SLV’s daily chart, shown above, has something going for it that belies the very non-committal PPO indicator at bottom. Specifically, it is making higher highs and higher lows. That has been the case for about a month now. That is a building block for a bigger rally.
However, that rally is likely to be as short-lived as the one that lifted SLV to a record high. Because the weekly chart, shown above, is indicating a toppy pattern. Now I am looking at the PPO — and I don’t like the looks of it one bit.
Translation: SLV has trade potential, but I am not even considering a buy-and-hold here.
A Closer Look at SIL
Now let’s take a look at SIL. The daily shows a fainter pattern in terms of higher lows and higher highs. However, it has already broken down, as the 20-day moving average indicates.
If it sounds strange that SLV looks somewhat tradeable, but SIL looks rough, it should not. Mining stocks sometimes follow the commodity, but can also revert to the market thinking of them as stocks, not a closet way to own that commodity. I think that’s the most likely path here.
The Bull and Bear Cases for Silver
The bull case for a renewed silver rally is anchored by persistent structural deficit and a unique geopolitical tailwind. For the sixth consecutive year, the silver market is projected to be in a supply-off, with a shortfall of roughly 67 million ounces in 2026. This deficit is being exacerbated by military demand for high-end electronics and a massive expansion in solar infrastructure. That is turning silver into a 24-hour baseline power component via battery storage.
The bear case, however, highlights the extreme risks of this volatile asset. Silver is often described as a dual purpose metal. That means it is sensitive to both industrial growth and safe-haven demand. If the current spike in oil prices leads to a prolonged period of stagflation, the industrial side of the silver equation — electronics and automotive — could see a significant pullback.
The Takeaway
One way to consider trying to play the arbitrage potential, either with SLV rising and SIL falling, or at least SLV outperforming SIL, is to own SLV and also own an inverse exchange-traded fund (ETF) that shorts silver stocks. There’s only one problem — there isn’t such an ETF. So, here’s the next best thing, for aggressive traders.
This is not unique to SIL. Not at all. Many industry ETFs are crowded into a few stocks. SIL has about 40 holdings, but the top two make up 20% of the ETF. And the top 10 are more than half. So, one way to take the short side is to short the ETF. That’s not my preference, but others are more fond of shorting than I am, versus buying inverse ETFs.
The other way is to look at put options on those top holdings. Pan American Silver Corp (PAAS) correlates highly with the broader industry, so that would be the first one to consider.
My preference with silver and silver stocks at this point is to watch closely for a major decision to make itself evident. But for those who know their way around commodities, that arbitrage route could be enticing here.
Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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