A recent Credit Suisse strategy note highlights the decline in precious metals saying “the recent dip is a buying opportunity”. Specifically, they like silver in the near-term though they’re more bearish in the long-term:
“Silver sold off recently after the market failed to break key technical resistances around USD 35. Technical momentum and trend ratings are currently neutral. Due to its overvaluation, silver is more vulnerable to the downside than gold. For this reason, our longer-term view on the market is more cautious. Near term, however, silver could rebound from oversold levels. Given that silver is a more sentiment-driven market than gold, we would expect silver to actually outperform gold in the short term. At the same time, silver implied volatility continues to move lower, making buying options attractive. Given all of the aforementioned, we think buying at-the-money call options on silver looks attractive. We suggest a duration of three months, as implied volatility for this duration is particularly low in historical terms.”
Source: Credit Suisse
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.