Macro expert Lyn Alden warns that silver’s rally to fresh all-time highs has shifted the precious metal’s risk-reward profile.
In a new VRIC Media interview, Alden says silver’s appeal originally came from being both a precious metal and an industrial input.
“I viewed silver as more undervalued and also having many applications in the tech industry as well. So it’s kind of a hybrid industrial and precious metal.”
While the dynamic has not disappeared, she says sentiment on social media has exploded, noting that the pattern often happens in the late stages of a strong move across other speculative assets.
“The contrarian in me gets nervous when I see people on Twitter saying, okay, $60 silver, $61 silver, $62 silver. We kind of see the same thing in Bitcoin where it’s like, okay, $100,000 Bitcoin, then someone says $101,000, $102,000. When we started counting in social media on these new higher price levels, it shows where sentiment is.”
Alden says she would not be surprised if silver pulled back, warning that upside expectations should now be weighed against meaningful downside risk.
“I would not be surprised to see a correction in silver. It’s a very volatile metal… So someone owns $60 silver, and they expect it to go to $120. That’s only a double, which is nice. But there’s also a possibility that it could get cut to $40 at some point.”
According to Alden, the easy upside phase for silver is now gone as she views it as a more balanced trade moving forward.
“It’s less asymmetric than when silver was like $20 an ounce or even lower. I view it as a more symmetrical trade now. I would not be shocked if it goes to $100 next year or it goes to $40 next year. Neither would be shocking to me.”
At time of publishing, silver is trading at $76.
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