Subsequently to the upward revisions on gold, we have further boosted our silver forecasts and, amidst a broader medium-term precious metals rally, see the potential for silver to outperform gold as the XAU/XAG ratio moves lower towards 70 over the second half of the year.
On the fundamental front, silver’s linkage to the industrial demand makes it more exposed to a late-cycle demand thrust, which should also boost its pricing prospects, if anything. As such, we look for silver to break out higher over the medium-term.
Glance through the above nutshell evidencing risk reversals and positively skewed IVs still indicate bullish risks.
Given a strong technical outlook in early March, we decided to add to our position to lower the average entry cost.
We initiated longs in silver at $17.10/oz for Dec’18 delivery. Added an equivalent unit at $16.59/oz on March 1, 2018, for a new entry level of $16.85/oz.
Trade target is $19.37/oz with a stop at $16.00/oz. Marked to market at $16.89/oz on Mar21, 2018 for a gain of $0.05/oz or 0.3%.
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