One of the many misconceptions about the proper way to trade in silver markets lies in the fact that so many investors view silver assets as nothing more than a secondary precious metal. However, recent trend movements in the iShares Silver Trust (NYSEARCA:SLV) suggest that these long-term views might be ready for a revision.
In recent weeks, market uncertainties revolving around the destructive coronavirus pandemic have inspired incredible rallies in this space, as SLV has posted gains of more than 57% since March 18th, 2020. As we will see, several key events occurred on this day and all of this new bullish activity lends credence to SLV as a true value play that is also capable of posting sustained gains as long as macroeconomic disruptions continue to devastate global markets.
Trends in the gold/silver ratio have recorded massive reversals after reaching record highs on March 18th, 2020. This reversal occurred as the market’s underlying silver prices fell to $11.94 and one troy ounce of gold was worth nearly 127 troy ounces of silver. The gold/silver ratio has already fallen back into the 90s, so it is now clear that trend momentum favors a bullish outlook for SLV in comparison to the SPDR Gold Trust (NYSEARCA:GLD). Of course, we maintain a bullish viewpoint on both instruments but the potential for upside in the iShares Silver Trust remains clear given the underlying reversals we have recently seen in the ratios that guide GLD and SLV valuations.
Market performances during the second-quarter period seem to be validating these assertions and this adds even greater potential for SLV to outperform versus most of the fund-based trading instruments currently found in the commodities space. Macroeconomic correlations are significant here because they give traders an indication of which asset classes are likely to benefit from continued volatility in broader markets.
Source: Richard Cox | Kitco News
No comments:
Post a Comment