INTERVIEW: Hunt Brothers’ Floor Trader Discusses Epic 1980 Silver Squeeze

We may be looking at a short squeeze of the short positions that central banks are carrying to the tune of about $35 billion. If interest begins to develop on the long side of the market, we could see an explosive move up in gold. It was shortly after the Reddit-fueled, meme stock saga that the silver market landed squarely in the cross-hairs of the online community. However, the supposed silver squeeze and the one that followed have been rather ineffective when compared to short squeezes on Gamestop (GME) and the like. This article takes a look at the events surrounding the silver squeeze and some of the difficulties of shorting the silver market.

1. The first and second silver squeezes were said to have been conducted via the world’s largest silver Exchange Traded Fund (ETF), iShares Silver Trust, which has a $15.97 billion market cap at the time of writing.
2. Even if there were no underlying “bad acts” on February 2, 2021, the Hunt brothers have already proven that the government and heads of exchanges can change rules when they want to.
3. Its goal is to closely mimic the performance of the price of silver.
4. For a while in February, silver was the talk of the town in the precious metals world.

You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK. To understand the silver squeeze, you first need to know the meaning of a short squeeze. Short-sellers borrow shares of stocks that they expect to drop in price. Then they sell the stock and attempt to buy it back at a much lower price. J.P. Morgan Chase is one of the largest traders of precious metals, so the Reddit user mentioned taking on the banking giant.

Everyone is buying, and no one is selling the physical metal. Dealers are asking for 35% premiums… and that’s if you can get your hands on any silver at all. ” emojis are certainly exciting, they’re not really the crux of what’s going on in the movement. Many of those city index review involved say they want nothing more than for the price of silver to return to a fair and accurate level. While this high level of interest has waned a bit, people have remain focused on WallStreetSilver, the Silver Raid and the potential impending silver squeeze.

Silver squeeze explained

It’s a well-known fact that silver and gold can help you hedge against inflation. The key is purchasing gold and silver before the steep premiums that could culminate as a result of Basel III, the #SilverSqueeze, and inflation. If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products. An inversion represents the possibility of a shortage of supply, which we also saw back in March.

Silver prices surged by more than 10% to over $30 an ounce Monday morning as Reddit-informed retail traders piled in on the commodity, the highest since February 2013. Silver suppliers started seeing an increase in orders before February, but on February 2nd, something big happened. People began buying silver and pouring bitit review money into SLV (iShares Silver Trust). In fact, we could make an argument that WallStreetSilver single handedly created the current drive to buy physical silver. Buying during the pandemic certainly played a big role, but it wasn’t until Reddit investors jumped in that the sale of bullion jumped over 250 percent.

Gold Ventures

Retail investors piled in en masse and kept doing so on Friday, Jan. 29 and Monday, Feb. 1. By Sunday, January 31, most bullion dealers were outright sold out. By Monday, February 1, silver was up nearly 8% from the Friday close.

This normally happens because investors place a stop-loss order to mitigate risk and ensure they are protected against any price declines. Nevertheless, the WallStreetSilver community is not giving up. They believe that silver is a highly undervalued asset and that its price is destined to rise. Since 2016, silver mine production has been on a steady decline, while industrial demand has been constant. President Biden has promised to invest 1.7 trillion dollars to fight climate change, an initiative that will involve a transition to renewable energy sources such as solar panels.

For the annual numbers, for September 28, 2020 to September 28, 2021, we are looking at $2164 as the first target and $2442 as the second target. If those targets are hit, then a reversion back to the mean is likely. The 9-year cycle is up to $2299 to $2712, so we have a long way to go. The VC PMI expected a reversion from these levels, which seems to be occurring. We also are breaking out of a little wedge that has been formed, which is a descending wedge – a bullish formation. If we trade above $1864, which is the monthly mean, then we are going to activate $1887 to $1917 as targets.

The person also noted silver stocks available to retail investors—First Majestic Silver Corp and the iShares Silver Trust ETF. It’s an indication of the demand that appears to be in the metals markets right now for taking physical delivery. Whenever you see this inversion in the spot month, it usually represents a shortage of supply.

Other Types of Squeezes

There’s definitely an impending silver shortage coming, and when combined with issues such as government reserves and industrial needs, enormous increases in the price of silver could be on the way. Some of the biggest recent happenings in the investment world have arisen thanks to users of the Reddit website and app. The insane increases seen in GameStop and AMC share prices had their inception in the WallStreetBets community, and the big news in silver is at least partially attributable to WallStreetSilver. We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only.

These kinds of moves are becoming average; $3 or $4 moves in a day. As we reach the end of January, we are more likely to see the winter lows into the middle of February. etoro forex broker review Depending on the short covering that occurs, if the short side of the market is pressured to liquidate their positions, we could see a massive short-covering rally.

This victory gained the WallStreetBets forum instant fame and inspired others to try and do the same. This is how the ‘Silver Short Squeeze’ movement came to life. Shortly after the news of a possible silver squeeze there were many posts on the subreddit denouncing this move as members sought to distance themselves from the idea. Despite having a consistent motive to the previous short squeezes – a protest against short-selling hedge funds – there are a number of issues when it comes to shorting the silver market.

Metals: PCE Price Index & US Jobless Claims Will Be Market Movers

This means they are betting that the price of silver will fall. Silver is different in many ways from individual stocks like GameStop, AMC, Blackberry and many more. For instance, having a short squeeze in silver could be difficult because it’s a much deeper and more highly liquid market. For instance, GameStop’s market cap was $1.4 billion in mid-January, but this increased 16 times over when Reddit traders started to talk up the stock. If we look at the quantity of silver stored in London vaults, it is nearly 1.08 billion ounces of silver, according to the LBMA data released back in November 2020.

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If the U.S. government suddenly had a need for silver at its 1970 levels, they’d have to purchase over 300 million ounces to meet it. TomRodgers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned.