According to Kitco, a report showed that money-managed speculative gross long positions in Comex silver futures rose by 736 contracts to 41,545. However, short positions also rose by 1,922 contracts to 42,404.
Silver now has a net short position of 859 contracts. For the sixth week in a row, net bullish positioning has decreased. Since early June 2019, the silver market has been a net negative for the first time.
According to analysts, the silver market is struggling since sluggish demand for base metals negatively influences its industrial interest.
According to some experts, copper prices must stabilize before Silver can find a bottom. As hedge funds closed their hefty copper short bets, this situation might be on the cards shortly.
(Picture 1. Source: Bloomberg and Sprott Asset Management LP. Data as of 4/30/2022.)
Although risk aversion is prevalent in the current climate, it is not the fundamental driver of longer-term silver demand, given its dual character as a precious and industrial metal.
The energy transformation narrative will potentially be a significant driver of silver demand this year and in the future. Both the epidemic and the war in Ukraine have increased investment in energy-transition projects. The current environment’s geopolitical difficulties only bolster that tendency while weakening other aspects of silver demand.
Peru is the world’s third largest Silver producing country. According to the Ministry of Energy and Mines of Peru, Silver production was down more than 15% compared to July 2021. A drop from 295 207 kg to 249 825 kg.
*Red lines are a downtrend. The heavy red line is the long-term trendline.
*Green lines are uptrend. The heavy green line is a long-term trendline.
*Blue lines are short-term support & resistance lines
(Picture 2. Trendlines & Support/Resistance)
(Picture 3. – moving averages and RSI)
The silver market works differently than gold and is much more connected with the industrial and technology sector. Silver is widely used in various productions and is considered primarily industrial metal rather than protecting one’s money from economic uncertainties like gold.