Gnanasekar cautious on silver, stays bullish on crude

T Gnanasekar of CommTrendz Research and Fund Management spoke to CNBC-TV18 about his views on the commodity space.

Below is a verbatim transcript.
 
Q: Silver has assumed a lot of momentum over the last few days. What would you do with it now? A: Silver, essentially has moved in line with overall pro-risk sentiment. Also, on its own, the ratio play has been quite strong. It has been almost moving something like for one ounce of gold, you get 57 ounces of silver. So, that is a sort of ratio it has been. Historically, it is somewhere close to 1:16. So, that is the reason why we see silver performing much better than gold and I think this trend would continue further. My sense is that it would test somewhere close to Rs 59,000 per kilogram or close to Rs 60,000 per kilogram. It is also getting into some kind of a technical overbought situation. So, it’s better to be cautious at these levels and not to be excessively long. If you were already long, I think its better to slowly start booking profits. Except for the threat of the technical overbought situation, it has still got some room upside. Q: Would you continue to hold longs in crude oil now? A: After some kind of a correction, crude has again started moving up. We have supply threats now, there is a storm heating Gulf of Mexico, most of the facilities are shutting down. So, that is sort of a near-term threat. The prospect of monetary easing is also helping crude. So, in the near-term, we see it possibly coming closer towards USD 99.50-100 per barrel. I think it will significantly face a lot of resistance there because overall, nothing much has changed except for the prospects of monetary easing. So, I think it has got some near-term strength, the sentiment pro-risk sentiment is going to take it up towards close to USD 100 per barrel but I honestly doubt that it can cross that so easily.