Reddit Bandwagon Now Targets Silver
Bloomberg notes Silver Coin Sites Grind to a Halt as Reddit Horde Takes Aim
Retail sites were overwhelmed with demand for silver bars and coins on Sunday, suggesting the Reddit-inspired frenzy that roiled commodities markets last week is spilling over into physical assets.
Sites from Money Metals and SD Bullion to JM Bullion and Apmex, the Walmart of precious metals products in North America, said they were unable to process orders until Asian markets open because of unprecedented demand for silver.
Retail traders, inspired by Reddit posters, stormed into the silver market last week and successfully drove up prices of the physical metal, silver miners and exchange-traded funds. Spot prices, silver futures on the Comex and the largest silver exchange-traded fund, iShares Silver Trust, all climbed more than 5% in the week.
Premiums on American Eagle silver coins have risen to close to $5 from a normal level of $2 over the past three days, according to Everett Millman at Gainesville Coins in Florida. His company’s website has a notice saying orders are taking longer than normal to fulfill.
“That absolutely motivates more people not only to jump on the bandwagon with the Redditors,” Millman said by phone. It also “reinforces the bias that holding physical silver is a safer investment as opposed to speculating on the stock market.”
Overconfident Shorts?
Also consider Reddit Investors Piling Into Silver Drive Up Prices a Second Day
On Thursday, silver miners’ shares spiked and the largest silver exchange-traded fund, iShares Silver Trust, saw a frenzy of options buying after the market emerged as a target on the Reddit forum r/wallstreetbets. The moves “have been extreme in some cases and have had little fundamental justification,” Eugen Weinberg, an analyst at Commerzbank AG, said in a note.
“Retail investors who have been swapping tips on such information platforms have caused massive shifts in the prices of some shares,” Weinberg said. “We are confident that the influence of retail investors on silver will not last all that long, and that ultimately industrial and institutional demand will be the key factor in the longer term.”
If there’s another short squeeze, “I think it will be fairly muted,” said Jason Teed, Director of Research at Flexible Plan Investments Ltd. “A short squeeze on a mid-cap stock with heavy short interest is one thing, but the commodity markets are extremely vast.”
Little Fundamental Justification?
There certainly was no “fundamental justification” for GameStop, Blackberry, Bed Bath & Beyond and dozens of other names that have soared recently on short squeezes.
That is of course you do not consider short squeezes “fundamental”. But justification or not, look at what happened.
Believe your eyes, not justification theories.
Silver vs Gold Fundamentals
There is a huge difference between gold and silver. Gold is not used up. Nearly every ounce ever mined is still readily available in some form.
Silver, however, is used up in industrial processes that are not easily recovered. There is no huge supply available.
Thus, I take exception to the generalized notion that “commodity markets are extremely vast.”
Got Silver?
March 2019 appears to be last time there was a net short position on the part of speculators in the white metal, which is, @pboockvar can tell you, always a great time to play the other side as a contrarian.
Mish
Don’t forget about the JP Morgan Chase Precious metals trader going to jail(?) I believe. But somehow the leader of the group (AKA President) stands unharmed and not indicted for any participation. I thought the buck stopped at the top?
It is easy to buy physical gold: Stock Symbol OUNZ is audited, allocated gold and one can even take possession.
One can also buy physical gold and silver at Goldmoney at very tiny markups. If you wish to do that email me.
I do not recommend coins. Markups are ridiculous.
I prefer to hold physical allocated bullion too. However it’s illegal for Sipps to hold physical silver for some reason in the UK (Gold’s OK) so my silver holding is in an ETF.
Made a few bucks on the Bunker brothers run in the early 80’s. My boss at the time convinced me. Back then I bought physical bullion plus saved bunches of quarters, dimes and half that were routinely found in your change. Did a lot of paper trading on line and 401 K. Always made a great return, but I quit trading in 2015 and started buying a tube or two of silver per month for a while. Just looked, I have 46 tubes of Canadian, US, and British. Should I sell when it hits that magical 35:1 ratio? Decisions, decisions. Maybe I’ll just keep it.
“Maybe I’ll just keep it.”
That right there…..is why metals typically become a stranded asset for most small stackers.
If one thinks of it as insurance, fine. I get that argument. But unless the currency crashes, you will never use that strategy.
Selling, legally, is a tax issue. I know many do not report small sales….and get away with that…but….collectibles are taxed at your marginal rape…..er, rate.
Mish, your on record as being long gold/silver so I have a question for you.
Are you looking to take a quick profit on the silver trade if the Reddit/WallStreetBets crowd runs Silver up by say 10-15 an ounce or will you hold long term regardless?
The reason I ask is because this crowd is going to come in and then go out again in a few months chasing the next ’cause’ and regardless of whether the silver fundamentals are vastly better than GameStop, the price will crash back down again once there are way more sellers than buyers (as will happen to GameStop in a few weeks time). So it seems to me the play is to ride the wave and then get out in a few weeks time when it crests, taking a profit and then rebuying once Silver settles back down to what it was before the hype.
Holding silver gold and miners.
I have no intention of selling and trying to get back in.
I am thinking about some speculative calls but have not done so.
“A short squeeze on a mid-cap stock with heavy short interest is one thing, but the commodity markets are extremely vast.”
GME market cp 23 Billion
Silver market cap $1.4 trillion
Mish, all sold out, even the 10 ounce silver bar ‘Mount Trumpmore’ for $390 is sold out on SD Bullion.
This all has a 1999-2000 feel to it.
Or 1637.
I wonder if any players in these things have learned to steer mobs in predictable, if probabilistic ways. ‘Cause the pitchforks and torches are sure lighting up the neighborhood. And the panicked cows are loudly mooing.
Speaking of steering mobs. 1/6/2021 may be an example. Maybe not. It’s easy to find a reason for something that already happened. Harder to find a reason for something that hasn’t happened yet.
Anyone see this whole show running out of steam and life goes on like normal? Like the late ’80’s crash.
I have been researching for weeks into buying silver to help when I get into my 70’s, 20 years from now. I had figured out a plan and was going to buy then a mob ran in and trashed my future. I am really pissed off. They didn’t even wait for silver to go down and buy smart in March, when historically silver is low. They came in and gobbled up my future like a bunch of hungry piranha. I have almost no money in an IRA, which I can’t put money into during unemployment, which has been over a year now. I was hoping for something solid, now I have lost my hope in the future. I will have to work until I’m dead. But the work I do now is labor intensive, so now I’ll have to start all over again. I hate this mob. Now they are ruining it for us regular folks. I live frugally and make little money and some greedy hoard just took a pound of flesh from my future.
It’s a long time until March. If you think stacking silver is what you need to do…..I wouldn’t let this little ripple in the force get in my way. Build a little cash and wait…silver might go up…but they aren’t going to quit mining it.
Certainly these super high premiums for physical metal are not a permanent condition. Nor is sold out dealers. The truth is that there is no shortage for the big ingots….just the consumer level products.
Just a bump in the road for a guy looking ahead 20 years.
Silver up $1.69
Lots of comments falsely detected as spam. I undeleted them.
I left one deleted calling for the head of someone. Please no such talk here.
I went to 4 gold and silver exchanges on Saturday afternoon and all got got cleaned out as soon as they opened. The Squeeze is on. https://www.youtube.com/watch?v=J9-SXcPGdkg&feature=youtu.be&ab_channel=PePPeMusic
My silver Dollars just got heavier.
Silver is a by-product of mining for lead, copper, zinc and other metals. Consequently there is an overhang of supply. Also if silver goes up enough supply will increase drastically as people start selling the silver they own in jewellery, tableware and anything else. That’s what happed with the Hunt Brothers. The supply is expandable.
You don’t know WTF you’re talking about Doug
What? No follow up comment to show why? I am dissapointed.
The electronics industry depends on a lot of silver. I imagine since production is dependent on a supply of silver, they have long standing contracts with silver suppliers to ensure disrupted supplies. There is one silver mine that I know of down in Mexico, but they have problems with sustained mining due to cartel activity in the area.
I had been looking for the short data. Not as up on metals as I once was, a decade ago. Thanks for posting that, which pretty much confirms what I was guessing.
I’m too young to remember that much about the Hunt brothers….I do barely remember the actual news stories…which didn’t concern me much, since I was a broke-ass student.
But my understanding was that when they tried to take down the paper market, TPTB changed the rules on the spot and ratfucked them big time.
No reason to think that an artificial, temporary demand for physical silver will break the house this time either. It’s the Golden Rule….the guys with the gold make the rules.
With that said….silver already looked good for a trade, even before the new cabal of amateur trading gangsters decided it was their next short squeeze. This is just fuel for a fire that was already burning.
The whole narrative around big banks naked shorting silver with impunity…..is sort of a myth, as far as I can make out…..but it is a widely believed myth. JPM, if they are in silver, at the moment…… they are probably long and strong and in at substantially lower prices.
I doubt we see silver go to $1000, as some have suggested. But $100? Maybe.
Anyway, in the spirit of fun….I have decided to play this one, with some old Monopoly money left in my trading account, which has been fairly dormant since 2018 or so.
I won’t be buying physical at a huge premium over spot, however.
This should be able to restart the gold/miners rally that has been in correction since this last summer.
I remember the last time silver traded up to $50 and I sold all my physical into the hysteria. So glad I did. Same this time. Quoting Hunt brothers, gold/silver ratio blah, blah, blah. The young guns feel invincible from a lucky Gamestop, La Croix soda play. It’s going to be hilarious when they go to sell back coins and bricks into an illiquid market. Pride cometh before the fall.
Although I vehemently disagree with the one share limits put by Robinhood on the likes of GME (utterly immoral to have strict curbs on one class of investors whilst another class can trade freely – better to have a full trading halt, reprehensible though that may also be), I can at least understand the reasoning behind it.
But they also have a 1 position limit on SLV which I cannot see any justification for at all.
As an aside, the need to protect the liquidity of Robinhood illustrates the (to me anyway) insanity of allowing investors to trade on margin in the first place