SIVR Weekly: Silver’s Pec Positioning Abnormally Light #For_SIVRNovember 14, 2019
Welcome to Orchid’s Silver weekly report, in which we wish to deliver my regular thoughts on the silver market through the Aberdeen Standard Physical Silver Shares ETF ( SIVR ).
Source: Trading View, Orchid Research
SIVR is an ETF product using a physically backed methodology.
Speculators lifted notably their net long position in Comex silver over the latest reporting period of October 22-29, to the tune of 1,079 tons.
Implications for SIVR : From a spec positioning perspective, we feel that there is plenty of room for additional net long speculative positions to be added to the market, which should therefore support the silver spot price and SIVR.
That said, we do not expect massive ETF outflows into year-end; in fact, we believe that silver ETF investors tend to hold their positions over the long term.
Implications for SIVR : The substantial increase in ETF demand for silver so far this year (~2,610 tons) has tightened significantly the refined market balance, lending support to silver spot prices and therefore SIVR.
The Silver Institute projects a contraction of 2% in silver mine production, as the modest increase in silver recovered in gold mining will be more than counterbalanced by the declines in all other primary and by-product production, except for supply stemming from lead/zinc operations.
Implications for SIVR: A contraction in mine supply this year will tighten the market balance of the silver market, resulting in firmer spot silver prices, which in turn will boost SIVR.
Given that the macro backdrop is supportive of the precious metals space (especially safe-haven assets like gold and silver) and given that silver’s spec positioning is abnormally light (in absolute and relative basis), we believe that silver spot prices are likely to appreciate materially into year-end, which will be positive for SIVR.
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