“Silver always overreacts, so when you have large moves, it goes far further than gold,” he said.
Silver Survey
There’s plenty of speculation that silver is due for a recovery. In a Bloomberg survey of 13 traders and analysts, the majority were bullish.
11 people said prices would rise and two predicted declines. Among the seven respondents that provided estimates, the median 12-month forecast was $20 -- indicating a 24 percent rally from current levels.
Assets in exchange-trade funds backed by silver have risen 6.6 percent since April 24 to 21,211 tons, according to data compiled by Bloomberg.
In the same time, hedge funds turned negative as prices tumbled. In the week ended July 11, hedge funds were net short by 5,402 contracts, according to U.S. Commodity Futures Trading Commission data. Short positions have tripled since the week of April 25 to 60,775 contracts.
Silver tends to outperform gold when there’s a rush in haven demand, making the metal more attractive for investors looking to hedge against surprise events, according to John Butler, head of wealth services for Toronto-based GoldMoney Inc., which manages a platform for investing in precious metals.
“Silver is a coiled spring ready to bounce,” Butler said by phone. “The Fed is getting ready to blink on rates, and that should be positive for all the precious metals, but especially for silver.”
This article was provided by Bloomberg News.