8/5/2023 0 Comments Silver short squeezeThey’ve always been the most bearish, as evidenced by the most selling, right when silver happens to be carving major bottoms.įutures are a zero-sum game, every contract has a trader on the long side betting a price will rise and an opposing trader on the short side betting that same price will fall. These weekly reports show how futures speculators as a group are betting on silver. All silver futures buying and selling gets distilled into the famous Commitments of Traders reports from the US Commodity Futures Trading Commission. Thankfully this useful data is readily available. Thus looking at their aggregate bets on silver reveals their collective sentiment on it. ![]() When they sell, they expect silver to fall in the near future so they are bearish. When these traders buy silver futures, they expect its price to rise imminently so they are effectively bullish on the metal. This leads to buying high and selling low, the same emotional affliction that torments nearly every trader.įutures trading is one of the purest forms of speculation, making leveraged up-or-down directional bets on underlying prices. Then they flee silver after it has plunged, waxing bearish with everyone else. They flood into silver futures after the metal has already surged in strong uplegs, buying into the popular euphoria. So it’s not an easy strategy to pull off.Even good futures traders succumb to groupthink, getting too greedy or too scared with the rest of the herd. “And they faced a class action lawsuit and a lot of other proceedings. “You know, prices plummeted in 1980,” he said. Oil barons William Herbert Hunt and Nelson Bunker Hunt back in 1979-80 bought up a whole bunch of the precious metal - investments worth more than $15 billion, about 400 million ounces of silver - in a similar move, “but, ultimately, it was futile,” Sanderson said. This isn’t the first attempted short squeeze on silver So that could be broader effects.” Listen to Marketplace’s Andy Uhler’s report on what’s happening with silver. ![]() “And, obviously, demand for solar is going to soar over the next few years with President Biden’s green stimulus, and the EU’s plans for green stimulus as well. “Silver is widely used in our economy today, you know, in electronics, and in particular in solar panels,” Sanderson said. In an interview with the BBC’s Victoria Craig on the global edition of the “Marketplace Morning Report,” Financial Times commodities correspondent Henry Sanderson explained how widespread the use of silver is around the world. It’s a huge market with plenty of buyers and sellers. That can move up prices in the short term, and Monday’s trades have indeed resulted in significant price swings of the precious metal.īut could that transfer into broader effects on the global economy? In the long term, analysts are still skeptical because there is just a lot of silver out there. Now, retail investors are targeting exchange traded funds, too, which means they’re trading in silver the way you would in stock, as a security of sorts, without having to actually buy silver bars. When you buy silver, there has to be a physical bar held somewhere. Silver is a commodity, not a stock like GameStop shares. So if the price of silver continues to rise, that could actually benefit the banks, too. Big banks have far greater assets than hedge funds, so it’s a little bit of comparing apples to oranges.Īlso, banks might own silver too, not just short positions on the commodity. The price of silver is rising, but analysts are skeptical. This time, however, it’s big banks, while with GameStop individual investors were targeting hedge funds. So retail investors appear to be trying to do what they did with GameStop: Drive up silver’s price to hurt the big market participants. The talk in online forums is that a lot of big banks hold short positions on silver, meaning they’re betting the price will go down. Individual investors are apparently fueling that increase - the same type who embraced GameStop lately.Īmong their goals is to make money by wrong-footing the investment pros. ![]() Is silver the new GameStop? Prices for the commodity rose to an eight-year high in overseas markets overnight.
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