In a tight race with Crude Oil…. Silver is the winner in the “which commodity will go back to new 2011 highs first following the Japan earthquake sell off” contest. Will other commodities follow?

After the Egypt/Libya/Japan led stock and commodity sell off since mid February, most markets remain -4% to -15% below their 2011 high points, leading to the million dollar question of whether the highs are in for the year and a down trend has started – or whether the panic sell off following the Japanese quake was just a breather before the up trend continues.

Those managed futures programs with longer term positions generally remain long stocks and commodities, although that exposure has been roughly cut in half over the past few months; leading us to believe that if Silver is to lead other commodity markets higher in a ‘risk back on’ trade (see here), its new 2011 high is a good thing.

However, we continue to believe that the larger opportunity for managed futures remains in an extended down move for stocks and commodities in a risk off trade. We’ll see if Silver is the reverse canary here, signaling the ‘all clear’, or whether it is rallying on different factors such as low physical supply for delivery, etc. Stay tuned…