The past few months have seen some unusual, maybe even unique, developments in the gold and silver futures markets, with gold becoming extremely bearish and silver almost ridiculously bullish.
Neither imbalance has amounted to much in terms of price action, so it’s not clear whether the most recent changes matter…
But silver has been and remains the really interesting case. Speculators – who are almost never net-short – spent a few weeks in that state before briefly reverting to slightly net long. But last week they jumped back to net-short in a big way.
Above is the action presented in graphical form, with the gray bars representing large speculators. Note how in the previous couple of cycles (early and late 2017) the speculators’ net positions got close to zero but then bounced back quickly to the more normal net-long. But in the current cycle they’ve been net-short for most of the past two months.
This has flummoxed industry analysts and led to some silver-to-the-moon predictions that, based on the rising volatility in the broader financial markets, are at least plausible.
Gold-Silver Ratio Also Looks Good for Silver
An intermediate-term indicator that’s also good for silver is the metal’s price relative to that of gold. As you can see, it’s getting to levels that over the past decade have seen silver subsequently outperform gold for a while…