Silver and the related exchange traded funds, namely the iShares Silver Trust (SLV) and Aberdeen Standard Physical Silver Shares ETF (SIVR), had eventful days following Election Day, but the post-election setup is interesting with this commodity.
SIVR seeks to replicate, net of expenses, the price of silver bullion. The shares are backed by physically allocated silver bullion held by the custodian. All physical silver held conforms to the London Bullion Market Association’s rules for good delivery.
“Silver markets have broken down a bit during the trading session on Wednesday, reaching down towards the $23.30 level before bouncing again,” reports FX Empire. “Quite frankly, this is a market that will probably continue to be all over the place due to the fact that stimulus will more than likely be less strong than once thought. If that is going to be the case, then the US dollar will retain some of its value and it is likely that we would see silver get hit just a bit.”
Near-Term Upside for Silver
Silver prices and related ETFs have surged on improving fundamentals with demand-side support due to the coronavirus uncertainty, stimulus measures, and recovering industrial sector. On the other side, supplies are dwindling as well.
Amid increased adoption of renewable energy sources, new, fast-growing end markets are emerging for silver.
SLV seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. It is not actively managed. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of silver.
Additionally, there’s a conversation to be had regarding silver’s technical setup, which could become increasingly alluring over the near-term.
“Having said that, there is still the safety part of silver, albeit just a small part of the trade. It would not surprise me at all to see silver continue to drift a little bit lower from here, perhaps down towards the 200 day EMA or even the $20 level,” notes FX Empire. “However, if we can break above the $25.50 level, then it is likely that the market goes much higher, perhaps reaching towards the $27 level after that. That was a scene of major supply, and I think it is worth noting that traders will continue to look at it through the lens of importance. That would be my first target if we break out to the upside, but I just do not see that happening in the short term.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.