Volatile exchange traded funds tracking silver have fallen sharply along with the metal from $50 an ounce. Now the question is whether beaten-down silver ETFs offer a buying opportunity or if it’s time to get out of the way.
“The iShares Silver Trust (NYSEArca: SLV) has been the most speculated and hence volatile of the commodity ETFs,” said Tarquin Coe, technical analyst at Investors Intelligence, in a report Thursday.
He added the silver ETF is trading at potential channel support while conditions are close to oversold.
The iShares Silver Trust lost 3% on Thursday and is off nearly 15% over the past week as higher margin requirements in futures markets have played a part in the sell-off.
Other ETFs for silver include ETFS Physical Silver (NYSEArca: SIVR) and PowerShares DB Silver (NYSEArca: DBS).
While some traders may be tempted to play an oversold bounce in silver ETFs, recent volatility makes it a risky bet. Silver was trading below $35 an ounce on Thursday. If the selling picks up steam, the next potential support is around $30 an ounce.
“Bottom line: the sell-off in silver looks near complete but new longs at current levels need to allow for a possible spike down to $30,” said Coe at Investors Intelligence. “A sustained break of that level could be used as a stop.”
iShares Silver Trust
Full disclosure: Tom Lydon’s clients own SLV.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.