Commodity Trader's Almanac 2O11

50

SILVER SLIPS IN MAY

Silver has a strong tendency to peak or continue lower in May, bottoming in late June.

Traders can look to sell silver on or about May

13 and hold until on or about June 24. In the past

37 years, this trade has seen declines 24 times,

for a success rate of 64.9%. At press time in

early June of 2010, this trade was conforming to

the seasonal price declines as illustrated in our

case study on page 125.

The futures market has, without a doubt,

been trading under extremely volatile conditions

recently. This type of environment may not be

suitable for all traders, especially those who can-

not monitor positions closely. There are other

products to trade, such as the exchange-traded

fund, iShares Silver Trust (SLV), shown in the

chart below. Notice the price action is identical

on a closing basis with the underlying silver

futures contract and SLV.

Each share represents one ounce of silver;

the closing price of the ETF will represent,

within reason, spot silver. As of June 3, 2010,

SLV owned 297,540,664.7 ounces of silver with

303.65 million of shares outstanding. Just like

every other ETF, there is a premium to net asset

value (NAV), which accounts for the difference.

The banks have to make a buck too!

The bottom line of the chart below shows the

38-year historic average sea sonal price tendency

of silver as well as the decline typically seen

from the highs in February until the lows are ...