One of silver’s leading indicators is concentration of the largest traders positioned on the short side. This data point is well below extremes, allowing for significant upside potential in the price of silver.
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While it pays off to look at silver price charts, certainly the longer term charts like this phenomenal secular silver price chart, it is equally important to check the current state of leading indicators.
Silver price leading indicators
Leading indicators are the foundation of our silver price analysis method.
We check other markets or data points beyond the silver price chart to understand the most likely future path that silver follow. Leading indicators include:
- The U.S. Dollar, inversely correlated to silver.
- Yields, inversely correlated to silver.
- COMEX silver net short positions of commercials.
This last one helps us understand the upside potential in the price of silver.
Silver price upside potential
One such leading indicator, particularly in the universe of COMEX silver futures market related data, is the concentration of large traders on the short side of the market.
- The less concentrated the largest traders short, the most upside potential in the price of silver.
- If concentration of the largest traders short is extremely high, the upside potential in silver is limited.
Below is the ‘latest and greatest’ when it comes to concentration of the largest traders short, particularly in the silver futures market.
Visibly, concentration is nowhere near extremes. In fact, it is pretty low, considering the 100% increase between the 2022 lows and 2024 highs. This suggest significant, maybe even massive, upside potential in the silver price.
Silver price outlook
The outlook for the silver price, particularly the upside potential that this one leading indicator allows for, is high to even massive.
One data point is not sufficient though. Silver, like any other market, requires as many as possible confirmations to increase confidence of a strongly bullish outcome.
This is what we derive from our recent writings 5 Reasons Why Silver Is The Investment Opportunity Of The Decade:
- Insanely powerful bullish chart pattern on the secular silver chart.
- Leading indicators, especially in silver COMEX, are (strongly) bullish.
- The USD and Yields are supportive.
- Gold is in a strong bull market.
- Silver is tremendously lagging gold, the lagging effect historically has not last for long.
- Silver sentiment is not overly bullish.
- A silver shortage in the physical silver market has been developing for 2 years.
If that’s not enough reason to expect a massive rebalancing act in the price of silver, particularly relative to the price of gold… How much more evidence does one need to expect a wildly bullish outcome?
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