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SLV ETF forms inverse H&S pattern amid high speculator demand

By: Invezz

The iShares Silver Trust (SLV) ETF stock is on track for another weekly gain as demand for safe-haven assets jumped. The fund jumped to a high of $25.87 on Wednesday, its highest level since June 2021. It has soared by almost 60% from its lowest level in 2022.

Silver price is soaring

The SLV ETF has continued soaring because of the surging silver prices. Data shows that the price of silver has soared by over 18.6% this year and is now sitting since 2021.

Silver has joined gold in its remarkable rally. Gold has jumped by more than 14% this year and is now sitting at its highest point on record. Some analysts believe that the metal could soar to over $2,500 in the next few months.

This rally is also in line with the performance of other industrial metals. For example, copper, one of the most popular industrial metals has jumped to its highest point in over 15 months.

Silver price has jumped because of the recent inflation trends in the United States. The most recent report showed that the headline consumer price index (CPI) jumped to 3.2% in March while core CPI rose to 3.8%.

The US will publish the latest inflation numbers on Wednesday. As I have written before, economists expect that the headline CPI rose to 3.4% in March while the core figure jumped to 3.7%. Silver and gold are often seen as inflation hedges.

Silver’s surge is also being helped by the strong demand for gold among central banks. China’s central bank has continued buying gold for more than 30 months. 

It believes that gold is a better reserve currency than the US dollar as the total public debt jumps. The CBO expects that the US debt will surge to over $55 trillion in the next decade. 

Also, China wants to avoid a situation where the US continues to abuse its sanctions power. It has already sanctioned Russia’s central bank and politicians want to use Russia’s assets to rebuild Ukraine. 

Therefore, in this case, silver price is soaring because it is often seen as a cheaper proxy for gold. With $1,000, one can buy more silver than gold.

Meanwhile, speculators have continued moving to silver, as shown below. The net speculative positions have surged to the highest level since December 2020. 

Silver COTSLV ETF price analysisSLV ETF

SLV chart by TradingView

Turning to the weekly chart, we see that the SLV stock price has bounced back in the past few weeks. It has crossed the important resistance point at $24, the highest point in May last year.

The fund has also formed an inverse head and shoulders pattern, which is a bullish sign. It has even moved above the neckline of this pattern. Further, the fund has moved above the 50-week and 200-week moving averages.

Therefore, the outlook for the fund is extremely bullish, with the next point to watch being at $28, the highest swing in February 2021.

The post SLV ETF forms inverse H&S pattern amid high speculator demand appeared first on Invezz

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