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October 31 2018

moneymetals

WAITING FOR THE BUY SIGNAL: What’s Going On With Silver Investment

invest-in-silver-social.jpg

The Silver Market is setting up for one heck of a move higher as investors are waiting for the signal to start buying. While the silver price has shot up due recently, it still isn’t clear if this is the beginning of a longer-term uptrend. The reason for the quick spike in silver was likely due to a small short-covering rally by the Large Speculators trading on the Comex.

For the first time in a quite a while, the Large Speculators (Specs) were net short silver. For example, the Large Specs were net long by more than 100,000 contracts last year when the silver price was $18.50. However, the last COT Report showed that the Large Specs were net short silver by 17,000 contracts:

Net commercial short positions silver fell from 7,400 - 2,600

The Large Specs are shown in the Light Blue bars. Typically, the Large Specs are long, not short silver. You can see the Large Specs going short three weeks ago as their light blue bars turned down. On the other hand, the Commercials (in Red) are usually net short. However, the Commercials had the lowest net short position in years. So, to see the price of silver shoot by nearly $1.00 in a few days isn’t surprising when I have seen this setup for a few weeks.

However, it’s difficult to know if this is the start of a long uptrend in the silver price. It’s coming, but I just don’t know if this is it yet. We will know when the Silver price is making a big move when it finally gets above $20 as the broader markets crash. Now, many silver investors might be a bit frustrated because silver sentiment and investment demand dropped to a low last year.

Continue here to read the article: 
https://www.moneymetals.com/news/2018/04/23/is-it-wise-to-invest-in-silver-001460

July 13 2017

moneymetals

Commodity Cycle Upturn to Lift Precious Metals Prices

Safe-haven demand for physical precious metals came in soft through the first half of the year as a rising stock market reinforced investor optimism toward the economy.

U.S. stocks are expensive by just about every valuation measure you can think of – price/earnings, price/sales, dividend yield, total market capitalization as a percentage of GDP, etc. Even Fed chair Janet Yellen remarked recently that equity valuations appeared “rich.”

The inverse of the extreme overvaluation in equities is the extreme relative cheapness of hard assets. Commodity indexes entered the summer at generational lows in real terms.

Equities expensive, commodities cheap? chart

The perception has been that the world is awash in plentiful, cheap oil. Just a few years ago, with oil over $100 per barrel, the headlines blared warnings about peak oil and supply shortages. At major cyclical turning points in commodity markets, the news tends to reinforce whatever trends brought about major highs or lows in prices.

What investors need to keep in mind is that commodity markets are always cyclical in nature. No matter how bullish or bearish the outlook happens to appear at any given time, prices will eventually turn and trend in the opposite direction.

Oil and agricultural commodities perked up as summer officially began. Whether it’s the start of a major cyclical bull market remains to be seen. But the supply and demand fundamentals are setting up bullishly for commodities markets.

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