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Silver: The Second-Favorite Metal

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May. 18 2018, Updated 10:47 a.m. ET

Where’s silver at?

With continuing downward sentiment in precious metals, it’s important to look at what large traders and hedge funds are doing with their positions in metals. This article focuses on silver, which is predominantly a precious metal and acts as a buffer along with gold during market unrest. Silver was trading at $16.4 per ounce as of 9:00 AM. The resistance level for silver is at a 50-day moving average of $16.55.

There’s also an industrial side to silver that could affect its price compared to broader markets (DIA). Silver (SLV) is heavily used in the technology sector and the manufacture of solar panels.

Silver’s performance compared to gold (GLD) is visible in the gold-silver spread, which compares the number of silver ounces it takes to buy a single ounce of gold. The higher the ratio, the weaker silver is compared to gold. A falling spread shows strength for silver. The spread was at 78.5.

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Silver positions

The above chart looks at the “Commitment of Traders” (or COT) data released by the Commodity Futures Trading Commission. It shows that large speculators and hedge funds had decreased their bearish positions on silver. It totaled a net position of -121 contracts, a weekly gain of 7,075 contracts from last week’s -7,196 net contracts.

The silver miners that have been underperforming over the last month include First Majestic Silver (AG), Pan American Silver (PAAS), Hecla Mining (HL), and Coeur Mining (CDE). They’ve fallen 1.2%, 3.1%, 0.25%, and 1.1%, respectively.

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