Even though silver touched a 13-week low on Monday, trader Steve Cortes says the risk remains to the downside.
He tells us 3 negative catalysts bode poorly for silver bulls.
-Weakness in Asia: “India shares are at a 3-month low," he says. Cortes feels precious metals and Asian markets are closely correlated.
- No QE: “I do not believe any type of Fed QE is imminent,” says Cortes. (A stronger dollar is typically negative for commodities, generally.)
- The chart is terrible: “Silver is even underperforming gold,” he says. “That suggests to me a lot of retail money is in this metal rather than gold because it’s less expensive.
All told, Cortes expects the decline in silver to continue. “In a world in low growth and low inflation – silver should be trading around $20,” he says.
Cortes is playing this thesis with a long position in the ZSL, an ultra-short ETF.