Gold/Silver: The floor on silver is stronger than ever
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Volatility is back, and emotions are running high after a better-than-expected nonfarm payroll report (517,000 vs. 193,000 exp.) put the dovish "pivot" narrative to bed and caused the market to reprice in "tighter for longer." Whether or not the Fed raises more than the expected 25 bps in March, we will have to wait and see. Next week we will hear from several Fed officials, and if the doves come back, this correction in the Precious Metals could be the buy of the year.
Daily Silver Chart
Silver's volatility continues to expand, with the average true range (ATR) hitting the highest since November at 88 cents/day. That means the Silver market could and should swing 88 cents in a typical trading session until something changes. If you followed last week's example "long strangle" strategy by purchasing the March $25 strike Silver call and simultaneously buying the March $22.50 put option for a net premium of 50 cents, you now have two options. You can liquidate the $22.50 strike put option, walk away "in the black" by about 20 cents, and have a free $25 call option, or unwind the whole trade for a nice gain. To further help you develop a trading plan, I went back through 20 years of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold that can easily apply to Silver." The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Silver.
After talking to many different Silver and Gold traders over the week, the number of fundamental reasons to own Silver is growing. The physical demand continues to expand, leaving the perfect setup for a decade of demand outstripping supply. Traders now are not only looking at the disconnect between the price of Gold and Silver with the ratio rising but also looking at Silver as one of the most undervalued natural resources on the planet. If you have never traded futures or commodities or would like to learn more about taking delivery of Silver, I just completed a new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.