With all the action–especially in commodities–over the past week, something feels amiss. Up 5%, down 5%, up 10%, down 10%. All in a day. Day after day. Is it demand? Is it purely speculative? And what does it all mean?
The deal is that leverage requirements are still too low because levered speculative traders continue to bring big volatility to the wild-swinging products like silver and oil. Sure, there remains a delivery problem for silver, but the commodity flash-crash last week could happen again at any time. And the specs who buy the dip may get burned. If that happens, watch out as prices will go back, in silver, to where it all began. Sure, today looked fine and dandy but you had better pay attention.
As far as stocks are concerned, they are simply treading water. Some exhibit higher than normal levels of volatility but other than silver stocks, things are range bound if you can believe that.If you enjoy the content at iBankCoin, please follow us on Twitter