It's been a volatile week for global markets, which has certainly been the case for precious metals. After an impressive rally to start the month, gold (GLD) and silver (SLV) have backed off due to short-term profit-taking, with sentiment swinging a little too far in one direction. The good news is that given the bullish long-term picture for both metals, further weakness should provide a buying opportunity.
As I noted last week, bullish sentiment for silver had pushed into nosebleed territory, with sentiment for silver hitting a reading of 90% bulls. This suggested that 9 out of every ten market participants were expecting higher prices, and these readings typically lead to outsized volatility to the downside. Unfortunately for investors in silver, this is precisely what followed, with the metal sliding from $27.00/oz to just below $25.00/oz.
