Silver remains noisy, as we have jumped a bit, but there is a massive barrier at the $55 level that we need to pay close attention to.
Silver
Silver has rallied a bit during the early part of the trading session here on Monday, as we have seen yields drop a little bit, real yields drop a little bit, and it provides a touch, if you will, of cover for the market.
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That being said, any rally at this point in time I continue to look at with a bit of suspicion, as silver does not pay you to hold it, unlike government paper. The bond market still pays you a real yield, so that is something that I would be a little bit hesitant to jump on.
Another thing that you should pay attention to is that a lot of what we are seeing is a recovery based on the idea that the Iranians are willing to talk to the Americans again. We've heard that about 100 times between the beginning of the war and now, so it's difficult to imagine a situation where things are going to change wildly.
The $55 level will matter
The $55 level above is an area that previously had been support, so we'll have to see whether or not that ends up being resistance. A rally to that area makes a certain amount of sense because we have broken a barrier and haven't retested it completely. However, it is not until we get a daily close above $55 that I even begin to question the idea of buying silver.
Furthermore, you have to keep in mind we have the JOLTS jobs number tomorrow, the services PMI number on Wednesday, and, perhaps more importantly than the other ones, the nonfarm payroll announcement on Friday.
I look at any rally at this point in time as a potential selling opportunity if and when it shows signs of exhaustion.
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