Silver’s Latest Selloff
City Index December 19, 2012 4:50 AM
<p>So what happens to silver as it falls victim to metals’ selloff? The recent damage in metals –particularly gold – is a result of the […]</p>
So what happens to silver as it falls victim to metals’ selloff? The recent damage in metals –particularly gold – is a result of the unwinding of this summer’s buying gold against euro as a flight to safety from Greek election woes. The unwinding of that long gold/short EUR began to unravel these past few weeks after the dissipation of Eurozone tail risk (Greece debt buybacks, Spain bank bailout and preliminary Banking Union).
Silver is up 14% year-to-date, compared to gold’s 7%. It is the fourth best performing commodity after wheat, soybeans and platinum at 24%, 22% and 14% respectively. Speculative activity among futures’ traders has also been kinder for silver, with the number of net longs reaching a 22-month high of 41, 275 contracts earlier this month. In contrast, gold net longs fell to 166,000 contracts, the lowest in three weeks.
Unlike gold, silver has persistently respected its four-year trendline, currently finding support at 29.20. Nevertheless, weeklies are likely to extend losses below 31.00 and onto the 30.70 low reached in November. Due to a most constructive technical foundation on the monthly oscillators, we expect stabilisation to emerge near the 29.50 trendline. AT which point, gradual interest is seen building to guide the metal back up to 31.00 , followed by 37.00.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.