Two key indicators of silver

Silver broke through 8900 and hit a new high. How should we look at the subsequent market?

This is the fourth time we talked about silver. Last week, we talked about silver for the first time, we said that we should pay attention to breakthroughs at the moment, and the second time we talked about silver, we advised everyone not to short. The third time we talked about silver, we said that the options tools may be better than futures.

Shang Futures Exchange's silver futures rose by 1.77%, but the option contract of 8900 that expired in July rose by more than 30% today, which means that the volatility has increased and it is a very imaginative market. Investors prefer tools to choose options. Of course, options have greater volatility and higher leverage and greater risks, which is suitable for professional investors.

What about silver after that? It is recommended not to follow gold first. Many friends in the industrial chain are used to looking at the price of copper and nonferrous metals to make silver. I suggest that you should also stop first, because silver has now gone out of an independent market. I think the most important point is the gold-silver ratio.

In other words, institutional investors are currently shorting the gold-silver ratio. As the current trade war gradually eases, China and the United States have begun negotiations in London, and the United States have also begun negotiations with Europe, the United States and Japan. It is logical to short the gold-silver ratio - the industrial attributes of long silver and the financial attributes of silver to gold have been raised.

The gold-silver ratio has fallen from around 106 in early April to 92 today, so the historical average is about 80, which also means that silver may still have a 30% increase against gold. In other words, the smoother the gold and silver ratio fall, the higher the probability of a unilateral silver market. At the same time, pay attention to the pressure level of gold and silver ratio 95. If the reversal exceeds 95, it also means that our institutional investors, long silver and short gold orders may have a wave of closing positions.

Another important point is to focus on silver's COMEX position. If silver wants to reproduce the market in July 2020, we must pay attention to whether COMEX's holdings can show signs of forced positions. Currently, COMEX's silver holdings are about 160,000, corresponding to 500 million ounces of silver inventory. It is a bit difficult to force the position, and it is still a bit difficult to start a big market in silver. However, if the recent silver position can quickly rise to 180,000 pieces, which corresponds to a 5,000 ounces of silver spot, I think there is a chance to watch. In addition, the positions of silver ETFs have also hit a new high recently, and I think the big market for silver is very worth looking forward to.