Silver Stocks (SIL) Stabilize, “500% Gains” Ahead?

Silver stocks stabilized Thursday as the Global X Silver Miners ETF (SIL) held near unchanged at $27.95 per share this afternoon.  Silver stocks traded near the flatline alongside silver futures, which inched higher by $0.09 to $41.61 per ounce.

The stability in precious metals helped silver stocks outperform the broader equity markets, which experienced widespread selling.  The Dow Jones Industrial Average (DJIA) tumbled 100.66 points to 11,512.87, while the S&P 500 Index slid 11.98 points to 1,206.91.  Investor risk aversion increased modestly, evidenced by the 0.5% rise to 31.79 in the CBOE Volatility Index (VIX).

Thus far in 2011, the silver stocks sector has languished near unchanged as is it continues to be impacted by a host of conflicting financial and economic factors.  The record-setting rally in gold has helped to lift its sister precious metal, while weakness in industrial commodities in recent months has provided a headwind for silver stocks.

On a year-to-date basis, the SIL is currently higher by 3.0%.  This compares quite unfavorably to the metal itself, which has surged 34.5% in 2011.  Furthermore, many silver stocks have yet to surpass levels reached in 2008, when the price of silver below $20 per ounce.