Silver ETF Makes Historic Move with Massive Options Volume

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Silver ETF Makes Historic Move with Massive Options Volume

Silver shined yesterday like it hasn’t done in years.

The iShares Silver ETF (SLV) not only flew 9 percent on Wednesday — its biggest gain since 2008. It also traded more than 2 million options contracts, its highest total since May 2011. SLV even outpaced other active symbols like Apple (AAPL) and Tesla (TSLA).

The move comes at a potentially important time for commodities, currencies and global markets. The U.S. dollar is having its worst month in 2-1/2 years as coronavirus drags on business. The Federal Reserve’s responded with super-low interest rates and pledges for more stimulus as needed.

iShares Silver ETF (SLV) with options volume, daily changes and key moving averages.
iShares Silver ETF (SLV) with options volume, daily changes and key moving averages.

Other parts of the world like China and the Euro Zone are recovering more quickly. Chinese economic growth beat expectations last week and its central bank kept rates unchanged this week. The European Central Bank is following a similar path, and leaders reached a key bailout deal for the Continent early Tuesday.

Investors have responded by favoring weak-dollar trades like precious metals and global stocks. They’ve especially favored silver because its price ratio versus gold was historically low. It also had a pair of bullish triangles recently.

This creates an interesting dynamic into the Fed meeting next Wednesday, July 29. Given the downward trend in the U.S. dollar, will it manage to hold its 2019 and 2020 lows around 95? If it breaks lower, even more attention may shift toward precious metals like silver.

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