The once hot iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) were once two of this year’s best-performing commodities exchange traded funds, but that scenario has rapidly changed. In recent weeks, silver has tumbled and a now lengthy losing streak for the white metal has made it one of this year’s worst-performing commodities.
SLV is at risk of notching an eighth straight month of outflows. Moreover, the ETF’s year-to-date gain has dwindled to the point that with just one or two more bad days for silver futures, SLV will turn negative this year.
“Precious metals continue to weaken, especially the price of silver which has declined ten consecutive days not counting today, and while consecutive days alone isn’t a reason to become bullish, a drop of roughly 8% in a relatively short period of time does suggest the metal is oversold. Conditions are ripening towards a relief bounce at the least, but we need more than a large drop and a streak to justify looking for a bounce,” reports DailyFX.
Silver could get another boost if gold prices start rebounding in earnest. Indian demand is vital for gold because the country is the second-largest buyer of the yellow metal behind China. India, one of the world’s largest gold consumers, could be set to lower its import tax on bullion, which could be major catalyst for gold prices.
Still, emerging market demand for gold has not picked up yet. For instance, China has shown little demand, with the Shanghai Gold Exchange seeing little growth in volume.
SLV now resides more than 8% below its 50-day moving average and more than 9% below its 200-day line. The ETF is also off almost 22% from its 52-week high almost 10% over just the past month, putting the ETF in correction territory.
“There is one more trend-line connecting a swing-low in January to the March low which could hold, but the preferred level to reach is the actual March low at 16.84,” according to DailyFX. “It’s only support if the market treats it as such. An obvious but not-so-obvious statement. Silver may touch support, but will we see signs of buying interest arrive, or will sellers continue to keep momentum intact as it has?”
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