Why is it not feasible or even possible to “squeeze” the silver shorts? 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.
This will tighten the supply of silver for industrial use and trigger the big industrial 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. People were pawning https://bigbostrade.com/ coins and silverware to take advantage of the high price of silver, adding to the supply, but there was less than a third of the silver market left that the Hunts did not control via futures. The billions in demand triggered the rise of silver to more than $50 per ounce.
This means most investors own a piece of paper saying that they own a volume of gold. This is fine unless a considerable number of investors decided together that they wanted to trade in that paper for their physical gold. A silver short squeeze, on the other hand, might be easier to execute.
The same group of GameStop investors attempted to short squeeze silver in September of 2021. Initially, the investors succeeded but the silver short squeeze was, well, short lived. For a while in February, silver was the talk of the town in the precious metals world. Internet searches related to buying gold had long dominated similar searches for silver.
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. This puts the silver valuation stored in these vaults to almost $32 billion. The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested.
This move stopped the Hunts from increasing their positions by temporarily suspending the fundamental rules of the commodities market. With longs frozen and shorts free to pile in, the price of silver began to slide. Margin calls on the loans began to take a toll on the Hunts’ reserves to the point where they were paying millions a day in calls, storage fees, and interest. The Hunts also preached their gospel of silver as the true haven in the upcoming inflationary flood to wealthy investors throughout the world and pooled converts’ funds to buy up more silver and futures contracts. Some of the speculators helping the Hunts included Saudi investors—a fact that would become important when the U.S. government started getting interested in the Hunts’ activities.
If silver can push above $30 on strong volume, the odds of an even more extensive bullish move will increase. In January 2021, GameStop and AMC weren’t the only stocks forex tp experiencing major swings fueled by certain Reddit communities. A user in the WallStreetBets forum posted about an attempt to create a short squeeze on silver futures.
Its goal is to closely mimic the performance of the price of silver. “Shares of the Trust are not subject to the same regulatory requirements as mutual funds,” according to the iShares site. The price manipulation by the bullion banks is widely documented by Chris Marcus from Arcadia Economic in the book “The Big Silver Short”. Silver squeeze is a movement to break the suppression of the price of silver by Bullion Banks.
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”.
Whether these actions were appropriate – many of which received government support – remains up for debate. What it proved, however, was that the “higher ups” could change the rules. Scrolling through the many threads in the Reddit group reveals what one might expect from any online community. There are memes, videos, stories and more than a few opinions on the greatness of silver.
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. This attempted silver short squeeze failed because silver is a much larger commodity than gaming stock. Big players can have a short-term net effect on silver prices, but as this market is so large and so liquid, the ability to squeeze silver, physical or otherwise, is more than a bit limited. So, yes, there are nefarious groups of investors who can plan for a short squeeze but there are also considerable limitations as it comes to pushing a squeeze on silver and other precious metals. Of course, we know that silver has recently moved to trade near its highest levels in eight years and this is why short-term long positions based on hopes for a new “short squeeze” in the precious metals market are simply not justified.
Instead of closing out contracts with cash settlements, a common procedure on the commodities market, the Hunts took delivery on silver. They then stockpiled this silver and used their large cash reserves to buy up even more futures. Following a few days of coordinated buying, the physical silver short squeeze did have an impact. The price of silver rose by about 5 dollars an ounce, a considerable jump for the precious metal. Gold could be susceptible to a short squeeze but it might prove more difficult to squeeze than other precious metals such as silver. The issue with gold is that most of it is traded electronically, by ETF or Exchange Traded Fund.
COMEX silver futures have been hammered over the last few weeks, down to $25.21 at the time of writing from a peak near $30 in late January/early February. Traders have also poured into mining firms and coin-selling sites warn of delays in delivering silver amid unprecedented demand. I couldn’t fail to have seen the GameStop buying frenzy that has consumed US markets in the past week. All posts and comments must be related to the #silversqueeze or the economy. BWCG is backed by prominent Canadian mining investor and billionaire Frank Giustra, who recently acquired 575,000 shares of BWCG, bringing his stake in the company to 13.4%.
He also discusses the role of silver in battery technology and clean tech, shedding light on the global demand for silver and its market trends. Whether they purposely intended to manipulate the market or not, the Hunts created a bubble in the silver market that severely shook the financial system. Whether the target asset is stocks, silver, or sprawling suburban homes, too much “irrational exuberance” in the market always comes back to bite the hand that feeds it in the end. Government officials considered a bailout to prevent systemic chaos. The action was vetoed, however, because the government agencies didn’t want to be seen as underwriting dangerous financial speculation. In the end, the Hunt name held true, and the brothers arranged a private bailout from a consortium of banks and companies.
SLV is one way to get involved, although you should always be aware of the risks in any kind of short squeeze. However, if that stock’s price increases drastically, it can cause short sellers to lose money by having to buy back at the higher prices to minimize losses. The silver squeeze is caused by investors buying up silver in an attempt to drive up prices and “squeezing” the investors.