by Chris Marcus, Gold Seek:
After a historic sell-off in the precious metals this past Friday, despite a move higher during the Sunday night open in the Far East, the sell-off has continued again in New York.
As we’ve talked about for the past year in this column, the volatility has been extreme, and it’s probably wise to expect that to continue. In both directions.
Here you can see a chart of the implied volatility for SLV, and you’ll notice how it surged in the past week.
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For what it’s worth, I’m guessing the dip down at the very right of that chart has more to do with the way their model measures the volatility, as the formerly way out of the money puts are now at the money strike, which leaves for a sometimes less than clean apples-to-apples comparison. But the volatility is still plenty high, and while I would imagine that it would come in from current levels, I would be surprised if we see the silver price just hover between the $75-$80 range for the next 6-12 months.
But with all of that said, where does that leave us in the silver market now?
First, while you may not want to hear this, I do feel it’s important to point out that silver is still the highest it had ever been prior to last Christmas. Of course, it kept climbing and got as high as $121.78 in New York and even higher in China and India, yet had it not gone higher and then come back down, people would probably have been excited that we have a $75 silver price. But it did, and now we are where we are.
Perhaps most importantly, maybe what we just saw is also a good reminder that when a market soars like silver did, even if it does ultimately go higher, there will be corrections. And when the moves are as extreme as the rally was, the corrections will also be extreme. As we found out over the past two days.
Yet with that said, given how every indication is that the primary driver of this past rally was that there are legitimate physical supply issues in both China and India, I still don’t expect that we’re about to see a repeat of 1980 or 2011.
Especially when we’re still in the early stages of governments gone wild over critical minerals, of which, of course, silver is now on that list.
