TECHNICALLY Compared to gold, silver could be considered fundamentally and technically undervalued, having recently reached its cheapest level relative to gold since April 2016. It should also be noted that the speculative crowd has all but vacated the long side of silver. A recent COT futures and options report showed that as of March 20th non-commercial and non-reportable traders were holding their smallest net long position since the COT started compiling the data. The reports also showed silver managed money traders were holding a record net short position of 35,172 contracts. This suggests that bearish sentiment could be reaching a zenith.
Open interest surged 26,992 contacts (14.1%) in just 15 trading sessions in late March, as funds built their net short positions. It might not take much of a rally to force those traders out. The resulting stop loss buying could catapult prices back toward the 2018 highs above $17.75.
Chart 1: Weekly Nearby Gold/Silver Price Ratio Spread 85 83 81 79 77 75 73 71 69 67 65
Source: CFTC
120,000 100,000 80,000 60,000 40,000 20,000 0
-20,000 -40,000 -60,000
Source: Bloomberg
David Hightower E:
info@hightowerreport.com T: 001 312 786 4450
This report includes information from sources believed to be reliable and accurate we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. Any information or recommendation contained herein: (i) is not based on, or tailored to, the commodity interest or cash market positions or other circumstances or characterisations of particular investors or traders; (ii) is not customised or personalised for any such investor or trader; and (iii) does not take into consideration, among other things, risk tolerance, net worth, or available risk capital. Any use or reliance upon the information or recommendations is at the sole discretion and election of the subscriber. The risk of loss in trading futures contracts or commodity options can be substantial, and traders should carefully consider the retransmission of this report without the express written consent of The Hightower Report is strictly prohibited.
Published on April 3, 2018
23 | ADMISI - The Ghost In The Machine | March/April 2018
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