On the heels of increased volatility in the gold and silver markets, it appears that the silver shorts will look to smash the price of silver in coming weeks — here is why…
From Jason Goepfert at SentimenTrader: “Silver is facing a tough row to hoe. The smart money is at near-record short exposure while options traders are betting on a further rally and seasonality is about to peak…
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Silver’s tough row to hoe
Late last week, silver took a tumble. It looks like traders are anticipating some headwinds that have become clearer in recent days.
“Smart money” hedgers have established near-record short exposure to the metal while the typically wrong-leaning options market is showing one of the largest bets on silver via the SLV exchange-traded fund (see chart below).
All of this is occurring at the same time that silver has a tendency to form its high for the year. Seasonality for the metal peaks in the coming days, with a relatively steady tendency to decline into June. Not a great setup for those looking for silver to burst higher in the coming months (see chart below).
King World News note: From a contrarian perspective, the silver market has major warning flags waving right now. That does not mean that the price of silver cannot head higher in the short-term, but it does mean that traders who are long should be cautious and understand that the market odds are stacked against them. Meaning, the commercials may push the price of silver significantly lower unless some extraordinary shock in global markets changes what is normally business as usual for the shorts where they look to rinse the weak paper longs.
The charts and part of the commentary above are from SentimenTrader. To try a free 14-day trial of the internationally acclaimed work that Jason Goepfert produces at SentimenTrader simply CLICK HERE.
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