While the fallout from the Brexit vote has added uncertainty to global markets, some investors have been profiting off the increased appetite for safety plays. Since Britain voted to leave the EU, the price of silver has shot up about 17%, hovering near its highest level in nearly two years. Its strong performance over the past few weeks has made it one of the best-performing major asset classes since the vote, driven by investors’ demand for risk-off trading.
But after its big run, investors are asking if silver can keep its upward momentum going. Bob Iaccino, chief market strategist and co-founder of Path Trading Partners, told Yahoo Finance’s Seana Smith in the video above that investors need to be careful of money managers beginning to take profits, warning that now may not be the best time to buy the metal.
“The difference with silver is the liquidity. There is not as much liquidity in silver trading as there is in gold so the move up in silver when it’s tracking gold is always much more dramatic,” said Iaccino. “When money managers start getting out [of silver futures contacts], those moves can be dramatic. They can hurt the individual trader much more than they’ll hurt the money manager.”
In terms of where he sees the price of the commodity heading in the short-term, Iaccino warns of a possible pullback. “I really see it going back down to about $19 and possibly even $18.05, and then I see buyers coming back in at that level.”
Silver settled up 0.3% for the week at $20.165 an ounce, its seventh week in a row of gains.