Shiny Things

Shiny Things

Risk sentiment looked to recover on the first day of February coming off the largest weekly decline for US equities since October. The presence (and perseverance) of the retail crowd was on display again as silver surged to an eight-year high. The Reddit crowd has determined -- and I'm quoting WallStreetBets here -- that silver is "THE BIGGEST SHORT IN THE WORLD." It's far from clear whether this market is as susceptible to being commandeered by the common man (so to speak) as beaten down shar
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6 thoughts on “Shiny Things

  1. Re: Silver – I know you refer to almost all precious metals as “shiny metal doorstops”, but let me explain who they’re mad at and what the investment thesis they are chasing is in supply/demand terms.

    SOURCE – https://www.usdebtclock.org/

    The current dollar to silver ratio now is $4,793 per oz. Yet, the current value of silver is $30.00 per oz. Meanwhile the current dollar to crypto ratio is 19.28 to 1, yet Bitcoin is trading at $33,868.10. I’m not saying that Bitcoin should be worth 20 bucks nor that silver is actually worth nearly 5k. But it speaks to the overvaluation of Bitcoin and the undervaluation of silver.

    Who they are mad at is of course, banks, because I suspect this reddit crowd contains some holdovers from the “occupy wall street” movement that received a very underwhelming response to their protests in the form of zero consequences for the financial institutions that shed half of our wealth in the early 2000’s.

    How they get the banks is by forcing them to come clean about silver paper trading. Again, per the source above, the paper to silver ratio right now is 185.96 to 1. Meaning every silver certificate you buy is claiming ownership to an ounce of silver that some odd 200 others are as well. This is obviously bllsht, and if that figure is even close to accurate, well then, someone sure missed out on their oversight duties.

    I agree, it’s hard to fathom a few thousand US retail investors flipping this market on its head the way they did with GME, there are almost $20B in silver reserves globally. But then again, GME is a worthless holding that they managed to turn into a ridiculous run. Silver is a precious metal that has many uses in manufacturing most notably with green energy. It’s not exactly something that’s going to be worthless at the end of the day.

  2. As a millenial who frequents both WSB and here, I have to say that the reddit “crowd” is probably not jumping into the SLV trade much, if at all. There is an understanding that the sub-Reddit is being watched and manipulated. Currently, any trade that is not GME or AMC is viewed suspiciously as a distraction.

    1. Exactly. The “old” (last week’s) WSB is NOT pushing SLV. They’re pushing back against this trade, as it looks like the biggest holders of SLV are hedge funds like Citadel. We’re already seeing WSB co-opted by newcomers (eg, Wall Street folks). Oh well – it was fun while it lasted.

  3. To be clear, I don’t have anything “against” precious metals.

    Sometimes I think my sarcasm and derisive jokes about gold may get taken the wrong way.

    I don’t put gold (or silver) in the same boat as Bitcoin. Not at all.

    I understand why people allocate to gold. I think you might be a bit unhinged if you allocate more than, say, 30% to gold, but to each his/her own.

    For me, it’s purely a portfolio hedge.

    It’s not that I don’t “believe” in gold (or silver) as a hard asset or think people who do are fools. It’s just that when it comes to hard assets, precious metals are way down on the list for me.

    1. I don’t put gold (or silver) in the same boat as Bitcoin. Not at all.

      This, I literally do not understand. The only difference is one is accepted b/c of thousands of years of cultural acclimatization and the other is emerging/in the process of being accepted (or not).

      To me, it’s like comparing Christianity to Scientology. Both are ridiculous but one has the stamp of 2,000 years of cultural and institutional approval (more if you include judaism as the parent religion) while we SAW the other emerge from our primal cultural slime.

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