uploads///Front Month Silver Futures  Month Price Evolution

Silver Was Treading Water as 2015 Came to an End


Jan. 4 2016, Updated 11:09 a.m. ET

Two-week low

Silver has been the worst-performing precious metal during the past five trading days. Silver lost about 2.9% on a five-day-trailing basis and 1.5% on a 30-day-trailing basis. Silver futures for March 2016 expiry lost 0.62% and closed at $13.8 per ounce. This is the lowest close silver has had in about two weeks. The trading volumes are also almost half what they were near the December Federal meeting. Silver has been range-bound from $13.8 to $14.4. However, the volatility for silver is around 23, which is way higher than that of gold.

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Technical analysis

The open interest seen in gold and silver futures contracts is more on call than on put. Higher call open interest may suggest that the trades are looking up for these metals and that we could see a rebound in prices. The RSI (relative strength index), which measures undervaluation and overvaluation, is at 43, just as it is for gold. The sentiment in the precious metals market has been bearish since the start of December. The RSI level was trading close to 30, which gradually rose to 50 during the Federal Reserve meeting. Now it is down once again.

The current trading price for silver is at a 6.7% discount from its 100-day moving average price of $14.8. The lower RSI and discount from the 100-day moving average suggests undervaluation. A possible rebound in silver prices may also lift up stocks like Coeur Mining (CDE), Pan American Silver (PAAS), and Silver Wheaton (SLW). The ETFs that may also benefit from a rise in silver include the iShares Silver Trust (SLV) and the Global X Silver Miners ETF (SIL).


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