Tuesday, June 10, 2014

Silver Bearish Sentiment Levels Reach Further Extremes

I discussed the bearish sentiment toward precious metals over the weekend, noting that the daily sentiment index toward silver reached 9% bulls last week. That means 91% of traders believed the price would fall from this level ($19). The following charts from The Short Side Of Long help provide an extended visual of the incredible hatred toward the metal.

The first chart shows that hedge funds are net short silver for the first time since 2006. It is the largest short position since, well, ever.


























The next chart shows that the silver short position (red line) currently held by speculators is also at a record high, by a wide margin.



Does all this bearishness mean the market must turn higher tomorrow? Of course not. Even if everyone is completely on one side of a boat, they can hang out there for a long time before someone decides to move back to the other side. The market moves when it wants to move.

That being said, for long term patient investors, it is almost impossible for silver to paint a more attractive entry point than it is today. See:

The Appeal Of Holding Precious Metals When Cash Yields Are Negative

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