The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) are two of this year’s best-performing commodities exchange traded products, but the pair have retreated in recent days.
That could be good news for buyers looking to initiate stakes in silver ETFs, but some technical analysts believe silver prices, while not necessarily for significant amounts of more downside, could trade flat for awhile before moving higher again.
Related: Analysis: Silver ETFs Are Outshining Gold
Silver and other precious metals enjoyed safe-haven demand as the equities market plunged into a correction. The metal also maintained its momentum as the Federal Reserve lowered its interest rate outlook to only two hikes this year from a previously expected four rate hikes. Additionally, with the dovish Fed stance, the U.S. dollar weakened, which made USD-denominated silver cheaper for foreign buyers and a better store of value for U.S. investors.
“Silver still has a fully-loaded boat of large silver traders long in the futures market (record long), of which their net position may have been reduced this week, but we won’t likely find that out in today’s COT report given it is for the week ending on Tuesday. The real meaty move lower came on Wednesday. At any rate, crowded trades are not where we want to be, but if price action suggests the crowd is right, though, then they are, at least until they aren’t,” reports DailyFX.
[related_stories]Silver prices touched two-year highs earlier this month. Traders looking to profit from silvers downside can consider the ProShares UltraShort Silver ETF (NYSEArca: ZSL), which is a double-leveraged product.
Related: Soaring Silver ETFs to Snap Up as Metals Shine
Year-to-date, silver has mirrored the surge in gold in response to ongoing market volatility. Silver has exhibited a correlation of over 80% to gold and typically moves in the same direction as the yellow metal but in larger movements.
“The support right around 19.20 will be pivotal; if the metal breaks below there, then a move into the mid-18s becomes the risk. Which is a spot that holds significant as long-term support. Perhaps by then some of the speculative longs will have puked out their positons and a possible reload for another shot higher could take shape. It is still too soon to discuss that, so we will stick with the short-term structure suggesting some work needs to be done by the bulls to turn the technical structure positive,” notes DailyFX.
ETFS Physical Silver Shares
