SLV Volatility and Silver Price

Want to know where the silver price is headed? Take a look at SLV volatility.

Terry Kinder precious metals analysis Bullion.Directory precious metals analysis 17 September, 2014
By Terry Kinder
Investor, Technical Analyst

It seems that since 2011 silver has been in a deep slumber. While the Sandman is credited with providing the pictures seen by children in their pleasant dreams, the image presented by SLV volatility is not so sweet.

So, what is this measure of SLV volatility? It’s the VXSLV:

CBOE calculates and disseminates the CBOE Silver ETF Volatility Index (ticker VXSLV), which reflects the implied volatility of the SLV ETF.

A generally declining level of SLV volatility has been reflected by lower SLV and silver prices

In the absence of much interesting happening in the silver market, the vacuum is often filled with stories, theories, memes, etc. outlining what will drive the price of silver either higher or lower. Most of this, frankly, is more noise than signal. What is clear, however, is that a general SLV volatility decline has been accompanied by a falling SLV and silver prices.

So, as an alternative to wading through often contradictory opinions and – too often – the equivalent of editorials urging you to buy or sell, keep an eye out for SLV volatility. Be skeptical of an increase in the price of SLV or silver without an accompanying rise in SLV volatility. Likewise, sustained SLV volatility, not met with an increase in the prices of SLV or silver, could present a buying opportunity.

In the case of silver, SLV volatility implies opportunity. Although silver may be slumbering for now, eventually the Sandman will pass on, and the silver market will wake up.

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