A rally in Silver markets will catalyze large-scale CTA buying activity, TDS’ Senior Commodity Strategist Daniel Ghali notes.
“Continued algo selling activity isn't out of the question just yet, but considering the unique implications of fast-draining LBMA inventories, the XAU/XAG ratio at multi-year highs and an imminently strong outlook for gold flows, discretionary fund positioning essentially flat, and SHFE aggregate open interest at multiyear lows, the set-up in Silver markets is akin to a powder keg waiting for a spark to ignite.”
“Explosive upside convexity in Silver markets remains severely underpriced, and the evidence continues to suggest the market is sleepwalking into a silversqueeze. Comex inventories have now risen by nearly 30 million ounces since the start of the year, which in all likelihood has eroded a significant portion of the ~55 million ounce buffer between the LBMA's free float and its long-term average daily trading volume.”
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