Silver has strongly bounced back since the start of October and is back above 17$. The precious metal has been very volatile lately.
The price of precious metals such as Gold and Silver have been weighed down by the number of “paper” contracts banks have used and abused over the last decade. According to the most recent 13F filling from the SEC (Securities & Exchange Commission), JPMorgan, Commerzbank or the Swiss National bank have increased their stake in Silver Wheaton.
We believe that this reveals the changing underlying fundamentals, in particular the fact that this may look like a reflation trade that would drive precious metals price higher. On top of that the strong exposure of financial institutions to Silver paper contract makes the increasing stake in Silver Wheaton very logic. It hedges big institutions exposure to Silver.
On a pure technical standpoint the precious metal is trading above its 100-Day moving average and we believe there are definitely more upside potential for the commodity.
By Peter Rosenstreich