What Is Driving Divergence in Gold, Silver Markets?

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April 1 (Bloomberg) -- Bloomberg's Olivia Sterns, Kenneth Hoffman, and Bob Iaccino, chief market strategist at TopStep Trader, put futures in focus with a look at silver in "On The Markets" on Bloomberg Television's "In The Loop."

From the floor of the cme.

What is behind the price swings?

Silver has been a real disappointment over the past few years.

Down 30% since the beginning of 2013, versus gold which is down 15%. the main reason, china loves gold.

They do not love silver.

It -- imports are done for years in a row.

Is retail demand stoking the market?

Industrial demand is 18%. that goes into batteries and electronics.

The rest goes into jewelry and investment demand.

You trade silver.

How are you treating it today?

-- trading it today?

It is difficult to trade.

It is a mixture.

It has a medium strength correlation to the dollar, negative correlation to the dollar, and it trades in sympathy with gold but not in an 80% rate.

More around 70% along with gold but falling fast.

Bloomberg reported at the end of march that the inflows into silver etf's were slightly higher while al of gold were passive.

-- massive.

Very difficult to trade.

Trading it, you have to include technicals.

Not so much with gold or equities.

Silver very difficult to trade the point it is at now.

If i am putting -- if i am a silver trade, with a gun at my head i am selling silver.

We are in an area of congestion with silver right now.

If i want to put on a solid silver trade, i want to move back up to 20 .40. then i have room for short-term target and possibly break of 19 level for medium-term target.

Let me put the trade into perspective.

If you short silver at 19 .84 and close at 19.01, a profit of $.73 per share.

Futures contract controls 5000 ounces.

A profit of $.73 per ounce.

That means the contract will give you a payout of 3006 hundred $50. let's stick with you for a second.

What do you think is driving the divergence between gold and silver?

Demand coming out of china got go on the mentally china loves gold.

India loves gold as well.

The demand for the jewelry side is not now nor is it ever going to be as strong as it is for gold.

On the industrial site, that is what it gives it the difficulties fundamentally.

Janet yellen talking about a stronger economy.

Janet yellen has the best track record in terms of predicting economic future and outcome in the u.s. so if we get a stronger economy, the industrial uses increases.

Then a fault in unison with gold a little bit.

Struggles at that point.

Joining us of the cme.

Thank you to ken hoffman joining us from bloomberg industries.

On the markets again in 30 minutes.

" market makers" coming up next.

Stay tuned.


This text has been automatically generated. It may not be 100% accurate.


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