Silver: A break north of $34-35 to attract more capital inflows - TDS

Macro funds are (finally) waking up to the silversqueeze you can buy into, TDS' Senior Commodity Strategist Daniel Ghali notes.

London liquidity remains severely constrained

"Our advanced positioning analytics point to a continued rise in Silver positioning from macro funds last week, lifting their net length towards its highest levels since 2018 with substantial dry-powder still remaining. Speculative interest in Silver has been the missing link for the performance of flat prices, and growing interest over the last two weeks suggests that a break north of $34-35/oz will attract more capital inflows."

"This is consistent with the timing for a countdown towards a silversqueeze, with historical precedents and academic research corroborating our view for additional upside convexity over the coming months. London liquidity remains severely constrained, even as dislocations have subsided in gold, as the US continues to pull in metal from the world."

"Lease rates remain extremely elevated and even though physical demand remains limited, speculative inflows are finally starting to appear. In most scenarios for prices, we still expect a drift higher in CTA positioning over the coming sessions, but the fireworks will come from additional discretionary trader inflows."