Recently in the SpikeTrade blog, Simeon B. and I have been exchanging ideas about the impact of the dollar’s decline and the potential shift toward commodities and real assets. Based on this analysis, silver seems a likely trading vehicle.
This shift towards commodities will be driven the world’s central banks stimulating economies as they fight off the deflation caused by the pandemic. This major shift in the financial markets will create a huge potential for astute traders.
No sense repeating the logic, Simeon explains it well. You can see his latest post, followed by our discussion HERE
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There are several silver miners to trade if you want, including Hecla, or HL. However, I prefer to trade the metal’s ETN, SLV. Its weekly SLV chart shows a strong rally, followed by months of sideway base building. Note how price is compressing as accumulation takes place. This should be a prelude to a breakout and the second leg of the bull run.
21 Comments
Chuck H.
The Silver miners ETF is SIL . I trade it or GDX for Gold Miners.
Garrett W.
Thank you guys for sharing!
Claudio D.
Thank you Grant for the post and the wisdom.
Walter J.
Thank you Grant and Simeon for sharing your great insights and knowledge with us!
Gianluca L.
Thanks guys. This kind of discussions makes Spiketrade an even more special site
Grant C.
Chuck, thanks for SIL. Simeon, many thanks for the companies. I’ll add them to my list. Garrett you’re welcome–if I’m right the precious and base metals will have a nice long run. Claudio, always appreciate you noticing these post. Walter, all the best with these ideas.
Nick V.
There is a lot of chatter this weekend about Silver being the next short squeeze play by the Reddit folks. I’ve read for more than 10 years the various theories that big banks hold massive short positions in the futures markets on Gold and Silver in order to keep their prices suppressed.
Grant, I’m interested to get your take on whether such a coordinated effort could be as successful as it was with GME, AMC, KOSS etc. Here is a link to an article.
https://www.zerohedge.com/markets/reddit-preparing-unleash-worlds-biggest-short-squeeze-silver?fbclid=IwAR3wz3HEHmyM66R50V4c4qEFjZ7jmd-fZBzFkvPcMZpeyK_7tqWW8TdJogk
Chuck H.
I don’t participate in social media or fad stock sites, but I read a columnist who stated Silver is a raising fad with Robinhood, Tic-Tok and Twitter. That ought to kill price to market value of silver. Big volatility swings would be attributed to this new “bubble” phenomenon.
Like Alex and Kerry say, “Be careful out there”.
Grant C.
Nick, yes, squeezing silver would make sense Silver is probably undervalued vs. gold and would probably make a logical target for the Reddit guys. It will be interesting if they can pull it off. Thanks for the heads up.
Grant C.
Chuck, yes, fads are dangerous. However, most guys I know in the mining business have been insisting that fundamentally silver is way undervalued vs. gold. Seems it is a key element in EV autos. SLV is spiky so caution is always important.
Grant C.
Simeon, something is going on. SLV traded 114M shares on Friday. Average is around 30M. Somebody thinks it’s in play. Silver has had parabolic moves in the past. As you noted, position sizing and caution is extremely important. I expect the ETNs SLV and PSLV to move first, then the miners.
Nick V.
It’s physical silver as well. Sites such as APMEX halted all silver purchases over the weekend due to unprecedented demand…
Will begin taking orders again once futures markets open tonight.
Nick V.
SLV is trading up almost 20% currently.
Alexander E.
At 9 pm futures up 6%, highest level since Aug 2020 but below the July 2020 top
Claudio D.
Commodities- there is a limited amount and if there is a stampede of buyers for whatever the reason, the demand will outweigh the supply by a lot. It wouldn’t be a case of the Hunt brothers cornering the silver market, but a market exploding to the upside by a buying frenzy.
Besides the silver, I believe we are in an early stage of a commodities bull market. Less sure about the oil.
Nick V.
My understanding is that as the price of SLV rises faster than the spot price of silver, the ETF will then raise money my selling additional shares and use the funds to purchase physical silver. So there could be a delay and eventual re-balancing of the SLV rise compared to Futures price as SLV buys bullion.