A Quick Look at Silver

I have been watching the March Silver Futures trading for the last couple of weeks. It's been an interesting battle going on there. Several times over the last two weeks, the price has dropped sharply below $27 on a related surge in the volume of contracts being traded. This is something long time silver watchers are not surprised to see. This time however, each time the price fell below $27, a surge of buying volume would push the price back up over $27. That is a bit unusual. This battle raged on until today we got a seemingly clear break above $28. The chart below shows this battle visually with the straight line across at around $27 (click on chart to enlarge it).


                                                                                  

Chart courtesy of StockCharts.com


It will be interesting to see if silver is ready to make another run at $30 soon. With just a few days until March delivery for futures contracts, there is still a large open interest (over 50,000 contracts). Many are watching closely to see how many of these contracts stand for delivery in March and if that adds upward pressure on the silver price over the coming month. 

Update 2-23-2021 (9 am cst): The battle rages on as silver quickly falls back under $28. One key to watch for from a chart standpoint is -- will silver close today above its breakout point (around $27.50) in this pullback? 

Update 2-23-2021 (9 pm cst): Silver has held above $27.50 so far, so it passed that test. We'll see how it goes the rest of this week.

Update 2-24-2021 (9 am cst): Another big battle underway at the $27.50 area. This time silver is struggling to hold it. It seems both sides in the battle understand this a key level for direction in the short term. Also a big drop in open interest suggesting March contracts (now 28,000) that will stand for delivery may not be above normal as many were hoping for. A final above 10,000 contracts demanding delivery would mean 50 million or more ounces standing for delivery.

Update 2-24-2021 (4 pm cst): For the second day silver held above $27,50 and today made a bounce back up to $28. So far, so good. 

Update 2-25-2021 (9 am cst): March silver futures price has continue to hold above the $27.50 level, but also has managed to start a surge towards the $30 price point. So the battle continues at a bit of stalemate for now. Open interest on the March contracts is now down to 17,000 contracts with one day left before deliveries. 17,000 contracts represents 85 million ounces of silver. We can expect this will drop further, however anything at 50 million ounces or higher is a significant amount of silver standing for actual delivery.

Update 2-25-2021 (9 pm cst): Silver slips a bit below $27,50 on ultra light volume a day ahead of delivery notices. The stalemate continues. Still 16,000 open contracts as of right now.

Update 2-26-2021 (9 am cst): Silver fails to hold $27.50. This could be interpreted as negating the breakout on our chart above and falling back into its trading range (25-27). Silver awaits a new catalyst to make another try at $30.


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