Silver’s Bubble Is Still Deflating
Boring for longer
Silver continues to trade within the range we have outlined for weeks. The hangover phase continues as silver lacks a clear medium-term trend and likely needs more time to consolidate.
Source: LSEG Workspace
Lower highs
Silver is printing another lower high as momentum continues to fade. Spot is trading just below the 50-day moving average, while the 100-day sits lower around $71.
Source: LSEG Workspace
Dollar not helping
The recent strength in the dollar wasn’t in most playbooks. There is obviously more to silver than the dollar, but a well-bid USD is not helping silver bulls at the moment.
Source: LSEG Workspace
Silver stress
Silver volatility has eased recently, but VXSLV remains elevated. The market is currently pricing ~4.5% daily moves, so expect continued erratic price swings in both directions. Volatility shocks like the one seen in silver typically take months to work through the system.
Source: LSEG Workspace
Still in bubble land
Silver still scores high on BofA's bubble risk indicator chart.
Source: BofA
It's mostly speculation
Silver has traded in close tandem with EWY lately. There’s little fundamental overlap between the metal and Korea, but the same psychology of panic, both ways, has been driving both assets.
Source: LSEG Workspace
Convexity
CTA downside convexity in silver could become significant in a larger downside scenario.
