In fact, people wanted a lot more silver. Demand was up just over 100% year-on-year. Or, twice as much for those who prefer their math on the easy side.
According to standard classroom economics that would send prices higher – but this is silver we’re talking about. So what have prices done since then? Why Professor, they’ve dropped of course. That answer would get you an F on your Econ 101 exam, but if you predicted that in advance in the real world you’d be getting richer. Remember that the market rewards “being right” by letting you make money, and punishes incorrect answers by taking your money.
So in what some call the ever-perplexing world of silver, what happens next? You’ll recall on Tuesday we talked about the chart technicals for silver and how they’re pointing up. Well, the COT report is currently showing the opposite. Traders, it seems, have had enough of holding silver and have swung to the sell side. Which generally portends a near-term decline in silver prices.
On balance, this all says silver prices are more prone to drop down to chart support rather than rise up to resistance. This morning we’ll be looking at put option prices to see if it makes sense to open a position there. Or, if this is just another good time to wait…
The Gold Enthusiast