Silver Bull Faces Correction

by Adam Hamilton
Zeal LLC

Silver’s young bull market got off to a typically-slow start, lagging gold’s own new bull. But recently the white metal surged to catch up in a record summer rally. That left silver very overbought and facing near-term correction risks led by a record futures selling overhang and weak late-summer seasonals. But this strengthening bull still has a long ways higher to run yet before silver prices reflect prevailing gold levels.

Silver is something of an enigma. By the global supply-and-demand numbers, it’s inarguably another industrial metal. According to the venerable Silver Institute which gathers the world’s best fundamental data, industrial fabrication accounted for 50.3% of total demand last year. That was followed by coins and bars at 25.0% and jewelry at 19.4%. Most of the silver mined is consumed, not hoarded for investment.

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