Silver (Metals, commodity)
- Marius Ciepluch
This is educational content. It should not be used to contruct trades or to support financial decisions.
Code:
ToC:
Silver
Fundamental concern | Description |
|---|---|
Outlier (seasonal) | 1980 Nelson Bunker Hunt and William Herbert Hunt
2020 - COVID 19 pandemic crisis  Silver price (USD) (source: Barchart) - 1970 - 2024. Outlier: 1980 (visible)
There is a (recent) trend of a Silver price increase since 2020. This is indicated with the blue and red trend-channels below (May 2024 - Aug 2024). The blue trend channel is the recent 30d, and red the recent 7d.
Month and week (Price Action)  Automated Technical Analysis of Silver (May 2024 - Aug 2024). COT and Open Interest in the same timeline By itself, without projecting fundamentals into this Technical Analysis, we may see a slight indication of rising prices based on the trading behaviour of others. But we know most investors tend to lose money, so this isn’t a signal. |
Open Interest | CFTC
The CFTC publishes the COT report. This report is the most relevant report for the Futures market. Silver is traded as a Future derivative (and other financial instruments follow the same pattern). In the COT reports, you will find Open Interest as a column. The update frequency is weekly. Open Interest marks the number of open contracts. This indicates market interest (long and short btw.).
Metrics for Open Interest:
Volatility (Standard Deviation): 15889.35
Average: 158040.03
Median: 157106.00
Minimum: 131956.00
Maximum: 186945.00
Typical Range: 146584.00 to 171371.00
Overall trend: Downward
Significant points:
Peak on 4: 166641.00
Peak on 12: 186945.00
Peak on 17: 175784.00
Peak on 26: 152544.00
Peak on 29: 138617.00
Trough on 6: 154724.00
Trough on 14: 161868.00
Trough on 23: 141026.00
Trough on 28: 136544.00
Trough on 30: 131956.00
Sudden changes (>5% day-to-day):
2024-07-16 00:00:00: 6.07% change
2024-07-02 00:00:00: -5.22% change
2024-06-25 00:00:00: 7.59% change
2024-06-18 00:00:00: 6.09% change
2024-05-14 00:00:00: -8.33% change
2024-05-07 00:00:00: -5.55% change
2024-04-23 00:00:00: 5.67% change
2024-03-12 00:00:00: -5.63% change
2024-01-30 00:00:00: -7.32% change
This alone would not suggest a buy / sell signal. Aug 19, 2024 |
Committment of Traders | We assume the Silver market is known by producers. Silver producers (mines) tend to hedge their positions by shorting futures. This ensures that they can sell and benefit from the market in case of price shifts. In case of precious metals this isn’t as relevant as for soft commodities, given that soft commodities expire (turn bad). Typically for Silver (and other precious metals) there is a gap between Producers going Long and Short. This hasn’t changed significantly in Aug 2024.
Metrics for Producer/Merchant/Processor/User Longs:
Volatility (Standard Deviation): 1.36%
Average: 3.23%
Median: 3.00%
Minimum: 0.64%
Maximum: 7.14%
Typical Range: 2.37% to 3.78%
Metrics for Producer/Merchant/Processor/User Shorts:
Volatility (Standard Deviation): 3.96%
Average: 25.57%
Median: 25.32%
Minimum: 18.08%
Maximum: 32.77%
Typical Range: 22.26% to 28.93%
Correlation between Longs and Shorts: -0.22
If you like, you can perform a Chart Analysis on the Open Interest as Volumne (with AmiBroker for example).
Here is seems that there is a decline of Open Interest, indicating a lack of new short positions entering the market, potentially supporting the price rise. But this is a weak signal, given the Gravity Indicator (left), and the range.
This alone would not suggest a buy / sell signal. Aug 19, 2024 Looks neutral to me. |
Seasonalities | Seasonalities are important, because they are a fundamental force how the markets move. Here we are looking at yearly cycles.
This alone would not suggest a buy / sell signal. Aug 19, 2024 Looks bearish to me. From August to December the Silver price used to fall, from 2014-2020 (excl. 2020) |
Inflation | Inflation is another fundamental market force. We can take a look at the Consumer Price Index (CPI) of the G20, assuming that these would be the economic powers that matter for the Silver market. That is an assumption.
This would not suggest a buy / sell signal. Aug 19, 2024 Should be assessed with “News”. Why? → Silver and Gold are precious metals, that are used during turbulent times. Whether times are good or bad is of course always a matter of perception. The news sentiment matters. |
News |
But: https://www.reuters.com/markets/us/goldman-sachs-lowers-odds-us-recession-20-25-2024-08-19/
This would not suggest a buy / sell signal. Aug 19, 2024 Looks neutral to me. The US economy is relevant for the world. Recession in this market would cause fear, uncertainty and doubt. Markets tend to panic. That is not likely (20%), meaning it’s not a buy signal for Silver (or Gold). |
Reports (1)(Larry Williams) | Looks bearish until Nov '24 to me. But ask Larry Larry Williams publishes a yearly forecast. It’s not guranteed to be right all the time, of course. Nothing ever is. |
Gold | Usually Silver and Gold correlate. Both are fear-driven investments, meaning that investors tend to secure their value with these asset classes. |
Reading a Technical Analysis with instruments of Quantitative Finance in conjunction with the fundamentals | In summary so far:
With indicators of Quantitative Finance you you further define:
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Summary | Our analysis compass: Neutral - slightly Bearish. You could go short if you wanted, for a seasonal trade ( definition on the start page Retail Trading ) Personally: neutral, not interesting enough. Better opportunities exist. |