Hedge Funds Pile Into Silver, Price Is Going Lower

Mid-May, silver started to break out. It was a good time for a (short term) trade in the grey metal on the long side. But the situation has changed rather rapidly.

Over the last week traders are wondering why has the price of Silver started to fall so quickly. After all, technical breakout just occurred? The truth is dumb money, in the form of hedge funds, have piled into the precious metals sector… and especially in Silver. The chart below shows hedge fund contracts sitting close to 45,000 net longs. Are we in store for a classic shake out?

Silver-COT-2007-May-2015

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