What Silver and Gold are Saying

With Gold handly outpacing Silver in the recent run-up, we are left to wonder why?

I believe that beyond the COT structure, the reason Silver lags Gold in price performance is because the perception and reality of the economy slowing down, dampening demand for Silver. The industrial side of Silver is keeping the lid on prices.

While Gold is primarily a monetary asset, Silver is primarily an industrial one. So until the monetary driver reaches for the gas pedal in terms of Silver demand as a financial storehouse of wealth, we will be left with modest gains and overshadowed by the performance of Gold.

Wish it were not true, but it seems to be.

Silver could be at around $35 per ounce or more, considering the price high it once reached while Gold was treading in the same waters near $800 per ounce. The conditions now are even stronger though with Silver being in much shorter supply.
SLV, the Silver ETF does act as overhang though. That amount of Silver could crush the market were it to be reintroduced in a scramble to lock in profits.

The way to play this is to watch SLV in and out flows, as well as the Comex warehouse, and the lease rates. When the numbers point to a tightness, be long. When they point to a flush position, short hard. Because Silver goes down much faster than it rises - sad to say.