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Silver 'Not For The Faint of Heart,' Needs To Hold This Level - Analyst

Kitco News

(Kitco News) - Silver prices have been hit hard recently but one analyst remains optimistic even if he warns volatility will likely remain high for the metal.

“Trading silver is not for the faint of heart… Trading silver requires a nimble approach to the market,” said Andy Hecht, author of the weekly Hecht Commodity Report on Marketplace, in a recent post.

Silver hit a four-week low following a hawkish speech by Federal Reserve chair Janet Yellen Tuesday afternoon. December Comex silver futures last traded at $16.89 an ounce, down 1.5% on the day.

But Hecht is not giving up on silver just yet, especially given his long history trading the metal.

“In the mid-1990s, I was part of a small team of traders that structured one of the largest and most significant long positions in the physical and derivatives market for silver. That trade wound up making Warren Buffett lots of money but that is a story for another time,” he wrote.

“My foray into the silver market taught me a great deal about the mysterious commodity that has tempted speculators for centuries and perhaps longer. Trading silver is not for the faint of heart.”

On a technical basis, Hecht said there is one key level he is watching for silver right now.

“As the daily chart illustrates, silver had been making higher lows since the July 10 bottom at $15.2450,” he explained. “To keep that constructive pattern intact, the volatile precious metal will need to hold the $16.80 level on December futures, which was the August 25 low.”

However, silver bugs should expect anything but smooth sailing.

“Volatile silver loves to violate technical levels, so while $16.80 stands as a critical line in the sand for some technicians, it is possible that it will make any longs with stops below that level pay dearly,” he warned.  

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