It’s been a tough year thus far for silver as it’s massively underperformed gold and remains flat year-to-date, but the relentless bid since the mid-March low suggests that we might finally be seeing a change of character here. Heading into June, silver was up by more than 55%from its March low, and a sharp retracement would have been entirely normal after a rally of this magnitude.
While it looked like we were going to see a sharp retracement as of mid-June, it’s now looking like silver is going to finish the month near its May highs. This is a sign of extreme strength, and often the best indication that an asset wants to go higher medium-term is not how it goes up, but how it sells off. This favorable technical picture is corroborated by a complete disinterest from small speculators in the silver trade, with exposure remaining near 1-year lows. Let’s take a closer look below:
(Source: Author’s Chart, CFTC.com)
This time around, however, we are sitting at the same levels for silver, and long exposure continues to remain well below 40,000 contracts, coming in at 37,000 contracts last week.