Silver prices fluctuated sharply again. After breaking through 30 US dollars per ounce in intraday trading on February 1, silver fell all the way on February 2. as of the early morning close this morning, Comex March silver futures tumbled more than 10 per cent to 26.475 US dollars per ounce; Shanghai silver night trading closed down 7.21 per cent at 5521 yuan / kg. In the view of analysts, the reason for the "sharp U-turn" in the international silver price may be related to the trading margin raised by the Zhi merchants. The recent obvious fluctuations in the silver market have also prompted some banks to issue trading risk tips again, and relevant experts point out that investors must remember to follow the trend blindly.
Silver has become a new battlefield for retail investors in the outer disk.
In February, the "short" battlefield of US retail investors spread to the silver market. Silver prices rose unilaterally on Monday, with spot silver prices in London jumping more than 10 per cent on the day, hitting a peak above $30 an ounce, a recent eight-year high, before a correction on Tuesday.
Driven by the outer market, domestic Shanghai silver futures also soared on Monday, with the main contract closing at 5939 yuan / kg that day, up nearly 9%, and continued to rise that night, breaking through the 6000 yuan / kg mark for the first time since September 2020.
The reason is that the incident of "forcing the air" by individual investors in the outer disk has pushed silver to the "tuyere and wave tip". Last week, WallStreetBets, a sub-forum in the well-known US forum Reddit, called on retail investors to take concerted action to "force short" a small number of US stocks led by (GME), forcing some large hedge funds short to "surrender" and close their positions.
The stock market "war" on this side has not stopped, and there is another storm in the commodity market. Last Thursday, the forum once again targeted the "short" target to the silver market. A forum user posted a call for retail investors to focus their next round of air-forcing firepower on silver.
The silver market is now one of the most manipulated markets in the world, the post said. Dozens of banks have masked actual inflation by manipulating the prices of gold and silver. Current actions by central banks around the world to release water should push up the price of silver, both in the industrial sector and in the monetary sector. The price of silver, adjusted for inflation, should be $1000 an ounce, not the current $25 an ounce. "
At the same time, the post also incited retail investors to push up silver prices by "short selling" by continuing to buy silver ETF (SLV). Just like the stock "short" incident, driven by market fanaticism, the post was "echoed", and money poured into the silver market in the last two trading days last week, pushing silver prices up sharply.
Xu Ying, a foreign exchange and precious metals analyst at the East Securities Derivatives Research Institute, told Futures Daily that as the heat of the discussion on the long silver on the US Reddit website continued to heat up last week, funds successively flowed into the silver market through various channels. The position of COMEX silver call options rose to 79441 hands, an increase of 15438 hands, a significant increase. On Friday, the world's largest silver ETF-iSharesSilverTrust (SLV) position surged by 1070 tonnes, with SLV inflows reaching $1 billion a day, almost double the previous record for ETF inflows. As of Feb. 1, silver ETF position data show that silver position is 19301.69 tons. For the silver market, the price boost from this scale of capital inflows is obvious.
Driven by the "frenzy" of the market, the spot silver price in London reached a high of US $30 / oz on February 1, and Shanghai silver futures also reached the 6000 yuan / kg mark at one point. At the same time, fuelled by the "short" market of silver, the trend of gold and silver diverged, and the ratio of gold and silver refreshed several years' lows. As of Monday, an ounce of gold could buy 63.6 ounces of silver, up from 73.3 ounces on January 25.
At the same time, the spot market, silver retail demand for silver bars and coins suddenly surged over the weekend, silver "short" wave has spread from the commodity market to physical assets. Silver retail sites such as MoneyMetals, SDBullion, JMBullion and Apmex say they have been overwhelmed by demand for silver bars and coins. Long investors firmly believe that higher silver prices will hit large banks that hold large short positions, and the current market momentum is skewed towards the "retail" side.
But even so, some market participants still say that they are not optimistic about this "battle." Compared with the "empty" game station (GME), the short market of silver may not be sustainable. They say there is a lack of clarity in short positions in the silver market, most of which are held by banks and brokers. However, there is no way to know whether they are net short positions in silver or whether they are used to hedge large physical positions.
JOEPERRY, an analyst at Jiasheng Group, warned that precious metals are often used as inflation hedges and traders should be aware that if silver is the current "short" target, it will affect the value of the dollar and the overall money market. Because silver is not a stock, central banks may not be as patient as equity regulators if the dollar starts to be "shorted" by silver.
RostinBehnam, acting chairman of the (CFTC) of the US Commodity Futures Trading Commission, said in a statement on Monday that US commodity regulators are closely monitoring recent volatility in the silver market and will work with other regulators to deal with any potential impact of these fluctuations. The company raised the margin for COMEX silver futures to 18% on Monday.
The event continued to ferment and the short-term volatility of silver increased.
Founder medium-term futures analyst Huang Yan told reporters that from a logical point of view, the rise of gold needs the weakening of US bond yields, and the rise of silver needs the support of gold or the continued strength of technical form. In practice, the fundamentals of silver have been weak, including photovoltaic silver demand and large apparent stocks do not support a big rise in silver. But silver has always been highly speculative in history. It rose 100-fold in two years from 1978 to 1980, and there was a very aggressive bull market around 2011, with an all-time high of around $50 an ounce.
"right now, it is very difficult to rely on the whereabouts of hot money to judge the market at a time when the incident of forcing the air out of retail investors in the United States continues to ferment." Therefore, Huang Yan said that the current price is not recommended to take the initiative to short, because hot money is not trustworthy, but long also needs to be cautious, in the case of increased volatility is the most suitable for the day to do the technical side of the market. It may be a better time for hedging to enter the market when the follow-up price is very high and the consolidation continues and the uprun is weak. In addition, he believes that gold may be brought up by the popularity of silver. At present, US bond yields have risen and fallen several times, and the downward pressure on gold has eased slightly, but it cannot be said to be completely reversed. We need to pay attention to the periodic pressure of 1870 US dollars per ounce.
If you have to participate in the current silver market, he suggests that investors operate purely technically in the short term and anticipate various possibilities. In the actual operation, we need to pay attention to the following problems: first, pay attention to the changes in the yield of 10-year US bonds; secondly, we need to pay attention to the risk of non-internal trading period, the intra-day volatility of the inner market is relatively easy to deal with, and the problem of short jump is very troublesome. It is necessary to flexibly close the position and lock the position; finally, because the fluctuation of RMB exchange rate is also uncertain, we mainly focus on the technical support pressure of spot silver (London silver) to do the inner position.
Zhang Chen, an analyst of precious metals in German futures, believes that in the short term, we need to pay attention to whether silver prices can effectively break through the previous high resistance. The price of COMEX silver reached a stage high of 29.92USD / oz in early August last year. Whether it can effectively break through this position is not only of technical significance, but also of great significance from the point of view of the interaction of gold and silver trends and the deviation of prices from the repair of speculative net long positions.
On the one hand, from the interactive operation law of the trend of gold and silver, if the silver price breaks through the high before, it means that the rising trend of gold and silver that began in mid-March last year will still be established, according to the historical law that silver peaked in front and gold peaked later, gold is still expected to take advantage of the opportunity to set a new record high.
On the other hand, from the point of view of the deviation between the price and the speculative net long position, after the silver price breaks through the previous high, it will naturally repair the situation that the speculative net long position has reached a new high since August last year, while the price has failed to break through the previous high, making the position return to the benign situation of resonating with the price.
However, if the silver price cannot break through the previous high, it means that the current market is still in the pattern of oscillatory correction since the beginning of August last year. According to the law that gold bottoms before and silver bottoms later, the probability of silver's early low of 21.8 US dollars per ounce still exists.
Xu Ying told reporters that in the short term, the rising market of silver has little to do with fundamentals, the mood to do more money is high, and the rising market is not over yet. At the same time, the increase of intraday volatility and the existence of leverage effect of futures and options make the situation of "double kill" easy to occur. She said that at present, it is difficult to judge the rising space of silver prices, which is mainly affected by market sentiment. We need to pay attention to whether there is a policy at the regulatory level, and we also need to pay attention to the downside risks brought about by the sharp fluctuations in risky assets. Generally speaking, be cautious in dealing with irrational market suggestions.
As far as the current precious metal fundamentals are concerned, Guoxin Futures analyst Gu Fengda believes that at present, the overall precious metal sector is suppressed by the lack of monetary policy easing and potential contraction panic. Judging from the recent Fed meeting and the statement made by Federal Reserve Chairman Colin Powell, the prospects for economic recovery are expected to improve in the future with the support of vaccines and fiscal stimulus. Although the Federal Reserve has previously stated that it has calmed down the panic of "scaling back" in the market, it is still not enough to allay worries, and the long-term pressure on precious metals still exists. In terms of silver, gold has a stronger industrial attribute and is expected to be strongly supported in inflation expectations and new energy development trends.
However, du Fei, a precious metals researcher at Jinrui Futures, said he was optimistic about the follow-up performance of the precious metals market. "at present, the US economy is still in a period of recovery and is still a long way from where it was before the epidemic, and there is no basis for a sharp rebound in US bond yields in the short term. At a later stage, we need to pay attention to the extent of the rebound in inflation, which is expected to be boosted by the continuation of monetary easing and the repair of the economy. " In his view, medium-and long-term precious metal prices are still mainly bullish, gold prices are expected to usher in a high of 2200 US dollars / ounce. At the same time, in the later stage, with the global manufacturing recovery superimposed with a surge in photovoltaic demand, silver industrial demand will continue to pick up, and there is still room for gold and silver to fall further. If the gold / silver ratio is revised down to a low of 60, silver is expected to hit a high of $36 an ounce.
