After coiling up, volatility has returned silver bears drive the metal down to it’s lowest level this year. And there could be further downside to come.
As noted in our weekly COT report, large speculators dipped into net-short positioning to finally join bearish managed funds, who have been net-short since early April. Seasonally, Silver tends to perform well from January through to April but this has clearly not been the case this year as it closed lower in February, March and April. It’s interest to note that May and June tend to be bearish months for Silver, with an average negative month sitting at -8.2%. That said, it has closed higher 54.8% of time in May over the past 30 years so the -1.2% average for May has been dragged lower by fewer, more bearish months. But with yesterday’s bearish breakout, we think we could be headed for another bearish May.
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