Silver Markets or Gold Markets as Safe Haven?
Silver Markets for Futures Trading vs Gold Markets
Silver has been viewed negatively as so many factors just paint a bearish scenario – for the moment at least! The Silver Market seems to have broken away from the Gold Market as a safe-haven vehicle and seems correlated more with the S&P 500. The Silver Market is currently perhaps viewed for its industrial metal qualities and the appeal is lost in a slowed economic recovery.
Today’s US Initial Jobless Claims came in down 6,000, while analysts had forecast a bigger drop. The ADP Private Sector Jobs came in less than stellar and tomorrow, we look forward to the US Unemployment. On top of the slowed recovery data, Moody’s came out with a warning to control any potential default or lose our AAA rating. The Euro Zone has been through a great deal as of late with the Greece debt crisis. The latest reports show that the Euro Zone may potential have control over the situation. In the US, Asia and Europe, we have shown slower manufacturing and export sales. Silver is contingent on the global growth!
The margins have also made it difficult for investors to hold or purchase the Silver as the margins had gone up to $28,500 and has come down only to $27,000 as of late. China has told their banks to warn clients of the Silver Market and the potential problems in the commodity exclusively. Volatility and huge volume on the Shanghai Gold Exchange led to increased margins and heavy risks. The Shanghai Silver had tumbled 21 % in May. The investment demand in China had increased 700 % on Shanghai Gold Exchange last year. The China Banks are still trying to promote both the Silver Bullion and paper Silver, but are urged to educate the investor and watch the allocations that the small investor may take on. The London Bullion Market Association is in the process of launching a silver forward curve.
The Silver Market and the products are going through a passage of nervous investors and conservative regulators for the moment. The US Dollar has weakened which should support the metals and most tangible products. The margins need to come down as the volatility decreases and the investor sentiment needs to see the luster of Silver again.
While we hate to see a washout in the marketplace, occasionally they are only a reflection of the previous move. Retracements are a necessary part of the equation. After all, that is a reflection of the Fibonacci Retracements. The margins may prohibit traders from taking the futures positions, but the options may be a way to garnish the benefits of the increased volatility and define a prescribed risk for the trade.
Technically speaking – Silver Futures Trading!
The July Silver contract had hit a high of $49.845 and just seemed to back off of the $50.00 target that many analysts had touted! We have retraced and perhaps are ready for another leg up!
We look for support at $34.27 and we see this market in buy mode! Look for entries on the dips and trail the stops.
It is suggested to always keep a stop-loss on a position immediately after it is entered. It is also suggested to stay alert and focus to stay Silver Savvy!
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
