Silver is near highs and physical supply still tight, but a lot of traders are betting it will fall using leveraged short stuff like ZSL. Look at the volumes.
The volume in the 2x long silver ETF AGQ was only around 2x its 90 day avg, while the volume in the 2x short silver ETF ZSL was close to 5x its 90 day avg.
A lot of traders are convinced this move cannot last and are positioning hard for a fall. You can see that conviction directly in the volume numbers. And yet with all this downside betting, silver still holding up.
I have no experience with this market, but i am guessing that the underlying market is much much larger than these ETFs.
If so, probably this wont have much impact on underlying price even if there is short squeeze for these traders in this ETF.
Just guessing, what a nice move though.
i agree the risk is asymmetric now. downside feels obvious to most, so it is crowded. Upside looks unlikely to them but if it happens it can be violent.
if it falls - i dont see it going below $60/oz. but again - we were at a time when 4000 for gold seems impossible.
not to mention silver has been manipulated and held back for a long time. even though people are expecting silver to fall, its demad is only going up in the real world. AI tech, green-tech demand, solar panels, EV batteries - it is used everywhere. and silver is not very widely available either. it is a byproduct - not directly mined like gold. So there is no surprise if silver jumps up to 100 too.
The problem with shorting silver is that people are looking at history to expect price movement, but the reality is that history silver was not so much in industrial demand as it is now. So the demand has gone up a lot while real supply is short. people might end up selling their holdings to book profits, but in the near medium to long term of 12-24 months, i expect it to cross $100/oz easily, with settling around 125.
For a very long time silver’s prices were not defeating inflation, and if we now adjust inflation to it from 2011 highs, then it comes to about $200. Even though it seems impossible right now, but the same impossibility seemed so for gold when it was 2500, and not it is a 4500.
commodities dont move like stocks and that is why they give more profits/ loss than the stocks.
ETFs are backed by physical metal, so they’re invariably linked. More inflows into ETFs removes useful physical silver from the market into some garage stockpile.
Edit: This specific ETF isn’t backed by physical though.
how much volume does this ETF have vs the spot market ?
Can this much volume + short squeeze move the market ? That was the point.
Not saying it wont go up. No idea about that, havent tested what it tends to do but i have heard of some very large moves around 2011. The guy i learned from had a outlier trade back then.
