PAN AMERICAN SILVER TRADING RIGHT AT KEY SUPPORT – WILL IT HOLD?

Pan American Silver stock has been victimized by the very bearish trading in silver futures recently. As oversold as silver is currently, will both the commodity and PAAS stock catch a short-term break? Pan American Silver PAAS shares are the number one go-to stock for traders and investors trying to play the moves in the silver futures indirectly. PAAS longs have been suffering through the gut-wrenching drop in silver prices for the last two months. How much more downside is in store for silver and for Pan American Silver? What the bulls are seeing… The bulls in Pan American Silver stock love the company's 3.5% dividend yield, reasonable price-to-book and price-to-sales valuation metrics and clean balance sheet statistics. However, their main bullishness right now stems from the fact that the stock at current levels offers them a relatively low-risk entry as key technical support comes in at $13.31. They know that they can buy at around that level and stop themselves out on any close below $13.30. Meanwhile, the technical crowd is of the opinion that if silver turns back up – even temporarily – and PAAS stock holds the $13.30 - $13.31 support level, a move in PAAS up to points north of $18 could be in the cards. Any close below $13.30 will negate their short-term bullishness, however. What the bears are seeing… The bears are quick to point out that neither Pan American Silver nor silver futures themselves have staged any type of rally of late despite the very low interest rate environment and seeming willingness of the global central bankers to keep their collective feet firmly planted on the gas pedal in terms of monetary stimulus. “If silver cannot rally in that environment, when will it be able to rally?” they note. The bears feel that balance sheet and valuation metrics mean nothing if the underlying commodity is likely to stay in a bear market trend. So, who will win out? In the long-term, Pan American Silver will likely rise or fall right along with silver prices in all likelihood. However, in the short-term, the answer to “Who will win?” will come quickly and directly from the markets. If PAAS stock closes below the $13.30 level, the bears win. If $13.31 holds up as support, the bulls still have a shot at being right in a big way.