No wonder they call it the devil’s metal…
Silver, that is. In the space of 24 hours, it opened at $15.39, traded as low as $14.15 and as high as $16.81, before finally closing the US session at $16.69. That is a wild ride. There will be some shell-shocked traders after that little session.
From top to bottom, that’s a range of nearly 20%…in 24 hours.
To put the silver move into perspective, gold traded in a massive $80 range…but that only represented a move of 7%. If it were to match silver, you’d need to see a trading range of nearly $200!
So if you’re still on the silver horse, you’ve either got nerves of steel or you’re blissfully ignorant — or a bit of both.
The action in precious metals shares in Australia was emblematic of the panic going on across the whole commodity complex. I haven’t seen that type of panic selling since the dark days of 2008. It was pure fear.
Bottom pickers should start to come into the market now, as yesterday’s carnage certainly shook many weak hands out of their positions. Whether it’s a lasting bottom is impossible to tell. We’ll only know in hindsight. But there could be room for a bit of a rally before more sellers come and take profits.
If you’re keen to speculate on a bounce and pick up some beaten down oil explorers, check out these three picks from my Diggers and Drillers colleague Jason Stevenson.
As I mentioned yesterday, these wild moves are all about the currency markets. The US dollar was weak overnight and everything non-dollarish (including commodities) all did well.
This rising volatility is the result of the currency wars. And as the years unfold, it’s only going to get worse.
The Australian dollar got a bit of a boost from the weaker greenback, although it’s only just keeping its head above US$0.85. That could be because the price crash of our great future export hopes, iron ore and LNG, is leading many in the market to bet on future interest rate cuts — rather than rises — in 2015.
For The Daily Reckoning Australia