SLVO - SLVO: If You Are Looking For A Rally In Silver SLVO Is Not The Answer

2024-04-10 23:41:36 ET

Summary

• 2024 has seen significant rallies in commodities, including oil, coffee, gold, and cocoa.
• The Credit Suisse X-Links Silver Shares Covered Call ETN offers exposure to silver but caps its upside to +6% monthly positive moves.
• Commodity rallies have proven themselves to be sudden and significant in short periods of time, thus making the SLVO structure inappropriate for a sudden break-out in silver.
• The fund's 12% dividend yield is not supported, with the ETN having lost almost -40% of its price level in the past five years due to its structure.
• Investors looking for silver to follow gold to the upside would do well to look at the SLV ETF rather than the SLVO ETN.

Thesis

2024 has been so far marked by massive rallies in certain commodities:

Oil is up over 21%, Coffee is up 12.5%, gold is up over 13%, all while cocoa has soared by 134%. Moves in commodities are sudden and very violent, making their implied volatilities high....

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