Hamilton - Silver Undervalued
Zeal’s Adam Hamilton writes: “After being sucked into the general commodities correction, silver has been relentlessly drifting lower since late February. But this weakness has forced the white metal down to a very bullish place technically. Silver is now quite undervalued compared to prevailing gold prices, its primary driver. Thus it has great potential to rally mightily in the coming months to regain much lost ground relative to gold.
Silver is a fascinating commodity that has won a fanatical following among traders. It is extremely volatile, with big spikes or plunges always possible. This makes it irresistibly alluring to speculators, who alternately pile in to ignite huge rallies before running for the exits to spawn near-crashes. The perpetual back-and-forth struggle between greed and fear is the essence of speculation, and silver embodies it.
But what drives these winds of sentiment that buffet silver around? Gold. Silver traders constantly look to the yellow metal’s fortunes to figure out whether they should buy or sell the white metal. While there are rare and short-lived exceptions, the vast majority of the time silver only rallies significantly when gold is strong and only sells off materially when gold is weak. Gold is the key to silver’s price action. -- To read the entire essay follow the link below.
Source: Zeal LLC