Silver Shock: As you might have seen, silver had a dream run in 2020. And well, to be fair, most markets mooned back then riding the tides of extreme monetary easing and a hoard of newly minted day traders.

Silver did 2.5x from the low to the high in the space of 5 months, and this was accompanied by a frenzy of flows into silver ETFs and decade-highs in bullish sentiment.

Turn the clock forward 2 years from the Aug 2020 peak, silver has almost halved: down some -40%, and investors have basically given up on it.

In the past few months, we have seen a flood of outflows from silver ETFs, speculative futures positioning move slightly net-short from previous crowded longs, and sentiment collapse to the most bearish readings in recent history.

We have seen what amounts to an outright capitulation by silver bulls.

What’s also interesting is that silver now sits at a key technical support level. So the question at this point is basically do you go with the bearish flow, or take the contrarian stance and be greedy while others are fearful on silver.

The macro backdrop would certainly seem consistent with weakness given the strength in the US dollar and aggressive Fed rate hikes.

But at the same time you might ponder whether those elements are already in the price, and that actually the next logical step could be for all this tightening to trigger a recession. And that would sink real yields and remove real headwinds for precious metals.

So, in the immediate term let’s keep an eye on these indicators because sometimes the market shifts before the macro narrative shifts…

Key Point: Silver bulls have completely capitulated.

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