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Blue Line Futures Research

Gold/Silver: The floor on Silver is stronger than ever

Posted: Feb. 3, 2023, 2:59 p.m.

Volatility is back, and emotions are running high after a better-than-expected nonfarm payroll report (517,000 vs. 193,000 exp.) put the dovish "pivot" narrative to bed and caused the market to reprice in "tighter for longer." Whether or not the Fed raises more than the expected 25 bps in March, we will have to wait and see. Next week we will hear from several Fed officials, and if the doves come back, this correction in the Precious Metals could be the buy of the year.

Daily Silver Chart


Silver's volatility continues to expand, with the average true range (ATR) hitting the highest since November at 88 cents/day. That means the Silver market could and should swing 88 cents in a typical trading session until something changes. If you followed last week's example "long strangle" strategy by purchasing the March $25 strike Silver call and simultaneously buying the March $22.50 put option for a net premium of 50 cents, you now have two options. You can liquidate the $22.50 strike put option, walk away "in the black" by about 20 cents, and have a free $25 call option, or unwind the whole trade for a nice gain.  To further help you develop a trading plan, I went back through 20 years of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold that can easily apply to Silver." The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here:  5-Step Technical Analysis Guide to Silver.

After talking to many different Silver and Gold traders over the week, the number of fundamental reasons to own Silver is growing. The physical demand continues to expand, leaving the perfect setup for a decade of demand outstripping supply. Traders now are not only looking at the disconnect between the price of Gold and Silver with the ratio rising but also looking at Silver as one of the most undervalued natural resources on the planet.  If you have never traded futures or commodities or would like to learn more about taking delivery of Silver, I just completed a new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Gold Silver Metals

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