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Silver has more work to do..

Scorpio

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#1
February 20, 2016






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Silver has more work to do..


While I primarily analyze and trade gold, I do tend to look at the action in silver as the sister metal can provide us with some very interesting clues about where gold is headed next. Over the years the Commitment of Traders (COT) report which is released at the end of each trading week by the CFTC can alert us to some very interesting developments in the precious metals markets.

The one observation that I have had over the years is that when looking at the COT reports, silver tends to clearly mark very important turning points at intermediate tops. While gold also exhibits this behavior, it shows up in Silver much more clearly due to the fact that the silver market is a much smaller market compared to gold. As of the latest COT report released on Friday, February 19th, it shows that the commercial hedgers (most commonly known as the silver producers and bullion banks) have put on a staggering 70,000 contracts short in the COMEX SI contract.

1.png


The last major top in Silver which was in late-October of last year, the commercials had put on about 60,000 contracts short just before the silver price plunged $2 lower by early-December. So our expectation here is that both gold and silver are gearing up for a decline into the March/April timeframe as we have been expecting. However, silver has much more work to do versus gold as it is still exhibiting a series of declining tops which is clearly evident in the chart above. In my view, Silver should correct down into the $14.00-$14.25 range in the coming weeks.



As long as silver can hold $14.00 and the commercials begin to cover their short positions thereafter, we should finally see silver take off and breakout over its declining structure. Now silver tends to show a seasonal tendency to rally in the late-March into April/May timeframe so this would be the ideal time for silver to buck up and show more bullish behavior just as gold has started to do.

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earplugs

Gold Chaser
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#3
Funny h8w the usd was hammered recently, and magically equities go up.
 

Scorpio

Hunter of Chin Li's Boo Hoo Flu
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#5
Silver is such a buy right now I have been tempted to snag a few 10 oz bars. Then I laugh and buy a Sovereign.

But it's the thought that counts right?
:blond:

your taxes are not high enough if you have gold,

please purchase 1 oz of silver and send in the rest of your cash to Bernie
 

Mr Paradise

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#7
As of post GSR at 80-1