One look at Google Trends, though, shows that silver overshadowed the yellow metal for an entire week. If a lot of new investors rush to buy silver, raising why do forex traders recruit the price, the short-sellers will be forced to buy it back at a much greater price. This ever-increasing upward pressure forces prices higher.
- Fractional reserve has nothing to do with selling anything.
- If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products.
- In the early part of 2021, though, it became more than just a typical Reddit gathering.
The American video game retailer is in a very unusual situation. The idea of a silver squeeze, in very basic terms, is this. In the end, this pullback is just par for the course, especially in silver.
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By taking delivery on silver futures and purchasing large quantities of physical silver. Their ultimate goal is to “squeeze” the market and increase silver prices. By definition they are rare, on a daily basis it is very rare but the total above-ground stock of Physical Gold is estimated to be around 190,000 tons. Gold Stocks, ETF’s and futures have a market capitalization of of $3 trillion dollars.
The way I see it, all it does is give us more time and another opportunity to keep accumulating silver and silver miners at discount prices. Some of this move will turn out to be a short-term speculative buying frenzy. But what this whole saga has done is to introduce a massive new following to the silver space. It’s all related to the now infamous WallStreetBets stock market trading hours calls to action, the latest of which targeted silver. It was enough to cause the Comex to raise silver margins by 18% after just two up days. “Silver had relatively poor performance over the last few years prior to 2020. There wasn’t too much investment in the silver mining sector over that period. Prices were quite depressed,” Feeney said.
Silver Squeeze Attempt Two
For some reason, though, talk of a silver squeeze hasn’t subsided. That’s because the precious metal is heavily shorted – meaning there’s a large number of futures contracts predicting the price will drop. If this doesn’t happen, “shorts” will have to pay the difference in price.
Silver squeeze: Is silver the next target of Reddit investors?
Because there is a world of difference between shorting a stock and hedging a commodity. The Gamestop shorts were naked, that is the shorters had to borrow the Gamestop stock and sell it in the hope of buying it back at a lower price. If enough investors buy Gamestop stock, it puts upside pressure on the stock price and the shorts get margin calls which they either meet, ie. Put up more margin or buy back stock to cover their short position.
But investor buying based on an error is, at best, pulling demand forward. There are good reasons to buy silver, without the conspiracy theories. The massive reduction in silver used in American coins is a major reason behind this decrease.
The bullion bankers, or commercials, whose business is not going long or short anything but rather charging a fee for their services. When a bullion banker goes long physical silver by entering into a contract to buy silver from a large diversified mining company, they automatically go “short” in the paper market to balance their position. When the silver price rises, the value of the commercials physical silver holdings, including future holdings, also rises so they simply cover their hedge and reset it at a higher price. This they can do ad infinitum so it is neither feasible or even possible to squeeze the silver “shorts”. If anyone were to try to squeeze the silver paper “shorts”, the biggest winner by far would be the commercials because of their physical “longs”.
“Just given the amount of money printing combined with how under-owned silver has been for the last seven years. Plus, industrial demand combined with increased investor demand, we could see that $50 mark,” he said. For now, I am watching and waiting to see if silver can close decisively above $30. I’ve been very optimistic about the outlook for safe-haven assets like gold and silver. Because I had been correctly expecting a serious economic crisis, I have favored safe-haven assets over risk assets such as stocks and real estate. I still believe that these safe-havens will thrive in the years to come as central banks continue to flood the world with liquidity in an attempt to prop-up the debt-ridden global economy.
Kootenay Silver Inc.
As of the date of the first of these videos, it had dropped around 10% from its level just a month earlier. Silver suppliers started seeing an increase in orders before February, but on February 2nd, something big happened. People began buying silver and pouring money into SLV (iShares Silver Trust).
We see a higher basis (which is future price – spot price) and lower cobasis (spot – future) as a result. WallStreetSilver is right about short selling having a major effect on the price of any asset. Does this necessarily mean a massive conspiracy is taking place? After all, many of those “short” on silver are the same ones who produce the metal for retail use.
(Kitco News) Silver received an unprecedented amount of attention this week. But one big misconception in the whole silver saga was that the Reddit community was united in the call. In fact, most of Reddit posts from this week warned against buying into silver because it was a distraction from its original GameStop play. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services. TomRodgers has no position in any of the shares mentioned.
As small size retail silver bars and coins get harder to find, it will be easier to buy the ETF. Buying the ETF will help to drain the supply of commercial 1000 ounce bars. This will tighten the supply of silver for industrial use and trigger the big industrial how to buy akoin silver consumers to mass purchase to protect their supply chain. As an added advantage to you, physical metal from the ETF can be redeemed once you achieve minimum holdings. Weak investment demand for silver comes despite strong global physical demand.