Hedge Funds Keep Betting on Silver Even as Rally Starts to Fade

by Luzi Ann Javier
The Washington Post with Bloomberg

(Bloomberg) — Hedge funds expanded their bullish bets on silver to an all-time high even as this year’s hottest metals rally began to fade.

Money managers added to their net-long positions in silver for the fourth time in five weeks, chasing the kind of returns that in the first three months of the year sent the precious metal to its best quarterly gain since 2012. The price surge is showing signs of fatigue, with futures posting two consecutive weekly declines and an almost 4 percent drop for May.

Silver leapfrogged gold in mid-April as the best-performing precious metal as data signaled a resilient U.S. expansion and a stabilizing Chinese economy. The commodity entered a bull market a few days later. Optimism on the outlook for industrial demand has since wavered, as some factory gauges released this month fell short of expectations.

“The intensity of bullishness that has come into this space in the last four months has just been mind-blowing,” Shree Kargutkar, an associate portfolio manager at Sprott Asset Management, which oversees C$9 billion, said in a telephone interview May 11. “Silver’s done very impressively this year.”

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