Silver Showcasing Low Volatility

November 9, 2018 8:42AM CST

With the recovery in the U.S. equities and the dollar index staging a rally this week, silver has experienced a slow break with prices stuck in a trading range of 14.25 to 14.80 for the December futures. The FOMC minutes report, which showed no change in U.S. monetary policy, also created no significant price reaction after the report.  The FOMC statement said to expect an additional amount of incremental rate hikes coming down the road.

Silver prices are expected to see a recovery in 2019 due to demand from the technology sector, and have a long-term bullish outlook in the automobile industry due to the shift in the hybrid electric vehicle space.  With the gold/silver ratio still near its all-time high, some believe silver is going to surprise with its performance to the upside. There is a current short speculative position in silver in the Commitment of Traders report. We will have to monitor open interest levels to see how price action dictates people getting out of their positions if silver prices indeed start to rally.

Silver’s implied volatility is trading at 16 percent, with the futures trading at approximately 14.25 and the money straddle is being valued at about .42 cents.  Being stuck in this trading range, we have support at 14.20 and resistance at 14.60.  It is hard to see anything significant for silver until we break out of these ranges.

Silver Dec '18 Daily Chart

Silver Dec '18 Daily Chart

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