I decided to write this to educate people around the globe about what is happening this week with the #silversqueeze – not only what I’m doing, but to educate you on the setup that was long in place before this rush. This movement is just intended to push over a domino that has been falling for the last 11 months.
- “Big” silver short banks have over 400 million ounces short.
- The oppressive short position has depressed the price of silver for decades
- Silver is used in thousands of industrial products and is the best conductor of electricity and has antibacterial components
- For nearly 5,000 years, silver was valued at gold at a ratio of 15:1. The last hundred years, 33:1. This past summer, it was 125:1.
- Banks have continuously manipulated silver and paid steep fines for doing so. Still, they continue to push price down.
- All large bullion dealers online ran out of silver this weekend, and reports of coin shops across the country have little or no inventory left
Structure of this post:
- What is a short?
- The suppression of silver
- How the FREE MARKET should solve this
- The fundamentally strong case for silver
- How I am playing this. You should not replicate what I do as I cannot give financial advice
What is a short?
I’m not a broker or in finance. From a lay perspective, as a trader, you borrow something – sell it at a price, and promise to return what you borrowed later. When you put large amounts of items up for sale, it tells the market that there’s too much of something at that price, and thus price falls to catch a bid where the market sees value. In the case of hedge fund shorting – these firms may find a stock that is wildly overvalued with the stock price to book value. They realize that the stock will continue its descent. When they sell short, they can “push” the price down. Those who feel the price will remain there will buy the supply.
I never, ever short. I “go long”, that is, I find value in companies and bet on them to do better. Why? One thing I heard is, “if you go short, you can lose an infinite amount of money”. This past week, earlier in the week – before I knew ANYTHING about what was going on with wallstreetbets, my buddy told me he was going to short Gamestop. I told him I never short, but I would try a “put”. With a put, you are betting on a price lower in a set amount of time. I had never done this before, so I bought 1 put, and in a day made about $200 on it (33%), and went on my way. When I had the put, GME was around $40 and I was betting it would be under $33. After I sold, within a few hours GME went over $100. By then, it was becoming evident what the absolute hell was going on.
My area of comfort is precious metals and miners. I tend to invest in nothing but them – but I recently added some copper, uranium, and battery metals. I don’t short, and glad I didn’t put $5,000 on a “sure thing” to short GME. Could have completely wiped me out.
With GME, hedge funds saw the stock was worth about $5, but was trading at like $20-$30. To them, this was a blockbuster in the making. No one is going to malls. No more retail stores. People download games directly from the internet. Why did you need a GME? The shorts piled in to push price down – and shares were 144% shorted. When Reddit’s group “wallstreetbets” started attacking the short position – what happened was there was a group of 1.5 million people decentralized to start buying GME shares – to force a short squeeze.
Before you cry foul here – the hedge funds saw an opportunity to squash a stock like a bug they felt was overvalued. They chose the risk of shorting. They shorted it to 144% and were doubling and tripling down.
The WSB folks saw an opportunity as well. Many avid fans of the company were educated to the fact that a “short squeeze” could be done and make them all rich. They played the hedge fund game against them. The WSB people were all warned of the risks of fighting a short squeeze – that they would likely lose a lot of money. None of them seemed to care – it was a generation raised on their beliefs and principles over the value of money. Still, many of them had to have some sort of safety net living at home with their parents yet – a luxury many of us didn’t have in our 20s.
What unfolded this week, movies will be made on.
Hedge fund owners borrowed shares at $30, sold them. Lots of them. This was supposed to depress the price and force those holding to cut bait and run, leading to a cascading collapse in price. When price hit the “normal” price of $5, the ide was to then buy back all of those shares and return them. Essentially, profiting $25 a share. What ACTUALLY unfolded was all of the shares sold were bought up instantly and as price rose, those expecting collapse were happy to sell at a higher price. Those shares were gobbled up. And so on. Those shares lent to the hedge funds? When price starts running up, you have one of two options:
- Cover your short position. That is, maybe you sold at $40 and now have to buy at $100. This would be tremendous losses.
- Double down. Add more firepower to try and push the price down harder
What happened was the firm that did this, essentially lost $6 billion in a day and had to get rescued. They loaded up again, doubled down, and lost – again.
This past week, estimates have $70 billion in losses for hedge funds.
And what is about to happen this week and the next and the next are where the movie will have its act 3.
The suppression of silver
What me and others saw this week was a group of 1.5 million angry kids pissed off at the system. A system rigged against them. And they fought back. As I told my friends, I felt this was the first shot fired in the Civil War of 2020. Or – perhaps the Revolutionary War of 2020. While the “cold” civil war started last year, the “hot” civil war started this week. But this is not just a civil war of many factions fighting each other – but a revolutionary war as well against oppressors. Those who have power and force their systems on us.
And the shots fired were stock certificates. Rather than the “Boston Massacre”, or Fort Sumter, if you will – this was “The Game Stop Massacre of 2021”. While hedge funds took a beating and were led to the slaughter….the chapter is not over and you have millions of Robinhood investors who were rigged against on Thursday and Friday limiting what they could buy – either not allowing some purchases, restricting purchases, or setting them to “sell only”. This was a market manipulation. And, a lawsuit was filed that afternoon against Robinhood.
Chapter 2 in this was the brokerage firm manipulating this. Now, a rise up against that trader is in place. Many calling for jail. It is now a war of the people against brokerages.
Chapter 3 in this will be a massacre of the long positions. Remember – at face value, this is a $5 stock, now trading for $350. At some point, and some point soon, there will be a run for the doors. And the hedge funds will reload and this stock could be a pile of ashes in 4 hours from whence the final battle begins.
Where the WSB was courageous in fighting the man – they chose a poor battlefield to launch their campaign. There’s a saying in military history I learned in 9th grade – “always fight from high ground, when possible” – as I was learning about Bunker Hill and Palo Alto.
While their tactics were relatively flawless – their strategy did not start with high ground. That is – they got to shoot a LOT of commie bastards, but they are fighting from in a Valley defending a $5 stock and the hedge funds have the high ground and nukes. The WSB has picked off many with rifles, but the hedge funds have taken cover, had a tactical retreat, and now will simply encircle the camp, lay siege, and the game will be over. Many soldiers in this battle will lose lots and lots of money. Perhaps this may end up being an Antietem for many of them.
But the strategic problem is solved. Find higher ground with items that are undervalued and artificially pushed down. This is how you get your high ground. This is how you reload your ranks, get new people to sign up.
With silver – you have something that is worth $27 on the “spot” market, but is actually worth a lot more. It is only $27 because of the “paper manipulation” of silver for nearly 4 decades on the Commodities Exchange”. With gold and silver, you must suppress these commodities, or else it reveals TRUE inflation. If inflation is seen, interest rates thus must go up. This is the last 40 years of interest rates.
Because of this, the government likes to tell you that “inflation is 2%”. They use something called the CPI to then artificially rig inflation lower. This allows them to “refinance the debt” like you would refinance your house. The lower interest rates they have, the more spending they can do and the less interest they are paying as part of the annual budget.
They conjure money out of thin air, “borrow” it into the system with banks, and it therefore “creates” money. This is a debasement of currency.
Let’s get into the silver play that has been cooking for awhile….
How “going short” works with silver.
When I tell most people that metals are manipulated, they smirk, nod, and immediately think of you as a conspiracy nut. Or, you get “all markets are manipulated”. They just have no….clue…how bad it is. Nor, do they realize it’s a thing that is beyond rumors and conspiracy. Got the news reports below for you skeptics.
Imagine the price of silver is $16, set by the COMEX. This is based off of the supply and demand – of “paper” contracts. That is, out of every 500 paper ounces created, only 1 actually exists. You see price start to go to $16.50. $17. People get excited and realize silver is going up!!!
Banks then create paper contracts out of thin air to push the price down. Like pushing a domino. Each contract is 5,000 ounces. So these big banks also know where YOUR stop losses are set. They conjure up “supply” of 50,000,000 ounces and dump it on to the market, pushing price down. World mining production is only 800,000,000 per year, and it is suggested that there are 2-3 billion ounces of silver in existence for investment demand. Not I said “in existence” but not “at this price”.
When people start getting stopped out, this puts in sell orders, cascading the price down. Price drops to $15.60, and the bank that dropped the 50 million ounces then buys it all back at $15.60, taking price to $16.20. The bank just “borrowed” 50 million ounces they did not have at $17, then bought it all back at $15.60. Price went up $.20 overall. Maybe they only bought back 45 million ounces, and are still 5 million ounces short.
This is what many banks did hundreds of thousands of times in the 2010s. Here is the list of people recently busted for this:
JP Morgan – $920 million
Scotia Bank – $127 million
Deutsche Bank – $130 million
So – in summary, they have used their shorting as a piggybank for the last decade.
Today – the BIG BANKS are 400 million ounces short. With a rising metals price. With $27 trillion in debt and inflation to come.
Two main issues:
- Hedging is legitimate. Most commodities trade at 125% daily production of the commodities. Imagine a wheat farmer hedging his production. Or, a bullion dealer hedging his inventory. Silver is trading at TWO HUNDRED DAYS production – ON AVERAGE. This is banks clearly using this not for hedging purposes, but to create inventory out of thin air (naked shorting) to depress prices and make money off of YOU.
- The downstream effects of artificially suppressed prices are that silver mine production has decreased every year for the last 5 years. It is now found in the earth at 8:1 of gold, yet trades at 70:1, and was 125:1 over the summer. All of the easy silver has been found, and exploration for silver from the main producers almost ceased to exist. Mines are a decaying asset, and exploration needs to happen to find new supplies. This means there are VIRTUALLY NO PRIMARY SILVER PRODUCERS ON THE PLANET. Worse yet, most people don’t realize that from the time you begin looking for silver until a mine is built could be TEN YEARS. Meanwhile, everyone is calling for a GREEN NEW DEAL – but have ZERO CLUE that SILVER is required for GREEN. Meaning – every iphone, TV, car, band aid, stretchy pants, electric vehicle, 5G, and solar implementation worldwide needs silver. And the banks are suppressing the price so badly that new supply isn’t hitting the shelves as fast as it is being consumed. In 2020, the silver institute showed that there was a 350 million ounce deficit. Remember, only 800 million ounces are mined in a year.
On Thursday, when WSB got silver in their sites, the banks tried to push price down TWICE in the day. They are NAKED SHORT, meaning they DO NOT have the silver they are selling. On THAT DAY, the banks sold 1 BILLION OUNCES. Oh – they did that FRIDAY too.
What you saw above was that banks actively papered the market to slow the ascent of silver. And the 133,000 number you see? These are the PAPER CONTRACTS that exist for March. Remember, each contract is 5,000 ounces. That is 670 MILLION OUNCES the sellers say they have – at $26 silver.
What happens every month is this. Open interest is a ton, like this. Most of these paper players make profits on price increases, but they don’t want to take 5,000 ounces of delivery to their house. So, they settle for cash. If price goes to $27, they sell. They made $1 per ounce, or $5,000. NONE OF THIS IS REAL SUPPLY/DEMAND. Furthermore, closer to the delivery dates, you see MASSIVE PUSH DOWNS to try and “shake hands loose” to then have that person who bought at $26 capitulating and selling at $25 to limit his loss to $5,000. THIS IS ALL DONE WITH THE SELLERS NOT HAVING METALS.
The structural issue is this….
The banks are short 400 million ounces, pushing price down, artificially. They cannot buy back their positions, because doing so will make a massive price spike – making the amount they owe go up exponentially.
The naysayers say – “there is PLENTY of supply”. What they miss is…”at this price”. Yes, there is supply. But not at $27. Not at $35. Probably not at $50.
What do I mean?
The high price in 1980 after a decade of inflation was $49. If using the CPI, which artificially pushes prices down, as mentioned, the adjusted price is about $120 in today’s money. Shadowstats uses original inflation calculations before the government changed them to show that silver at $49 in 1979 was $611 in today’s money.
So, it is most definitely not out of the realm of possibility that the true value of silver is well over $100.
No one is trying to “corner the market”. Rather, they are trying to remove or reduce all non-hedge related shorts. By doing this, it will return silver to a free market.
Normally, the CTFC and SEC are supposed to regulate this – but they allow it, for some reason. What many have called for is simple – if you have the product to sell, you can sell it. Period. This would end naked shorting. Additionally, position limits of longs would need to be reduced. There is one bank said to have over 300 million ounces that they amassed using the illegal techniques described in the article linked above. Forcing this bank to sell its metal to the shorts would alleviate a lot of concern.
Let the free markets decide this
So – where the GME people saw an opportunity with an entity that shorted too much, they picked a product who was shorted due to a potential decrease in share price incoming. With silver, you have the idea that buying a physical piece of silver at $27 could actually help get the free market price back to over $100. Unlike what will likely happen in the aftermath of the Gamestop massacre, the troops at the end of this one will not only be whole, they will be potentially 2-8x better off. This can then potentially recruit more troops for their next raid.
George Washington did not like up the troops to get slaughtered against the British. He used guerilla tactics. Asymmetric tactics. Raids. Ambushes. He re-defined warfare for an inferior opponent to take on a much bigger, stronger opponent – choose your battlefield wisely.
In this play with silver, the idea is to simply ask people to hand over the product you are selling. Period. End of discussion.
We have wanted government to help us for decades. But – no one has been answering the calls at the CTFC or the SEC for over a decade. Check out how Ted Butler at silverseek has been fighting this for 30 years, and those at GATA with gold have been fighting for 25 years. NO ONE IS LISTENING.
I believe now, they will.
What may come of this?
- Shorting as a hedge is fine. You are a wheat farmer. Cool. I get it. Banks doing non-hedging related shorts in commodities should be banned, unless they have 85% of the product. This was coming in June with Basel 3 anyway, but unclear if US banks would be actually following this or gaming the system.
- Shorting a dying company should only be allowed to have a short% only so much. Maybe 5%? 10%? Gamestop was 144%.
- If you see something short, check the books and speak to a licensed financial advisor to see if its the right investment for you.
See…the thing is, government does not have to make changes. The libertarian in me feels the free market is about to solve the above 3 problems.
- If you are massive short a commodity, the people will attack your weakness. Just as a hedge fund may attack an overvalued company, a group of 10 million savvy investors may find a commodity that is undervalued due to shorting. Lesson learned by free market activity: stop shorting things you do not have in your possession.
- If you are a hedge fund, and you over-short a company, there may be consequences. One consequence of shorting is you can have “infinite losses”. Let that sink in. Buyer, beware. Lesson learned by free market activity: be careful which companies/entities you short, like Tesla, because a fan base that loves the product can rally to its defense.
- If you are an investor, and wish to lose money saving a dying company, buyer beware. Lesson learned by free market activity: Joining a movement to “stick it to the man” can and most likely will end with you losing money. On the flip side, if you see an undervalued company overly shorted, speak to a licensed investment professional about investing in that stock. You can and will most likely lose a lot of money if you do not know what you are doing, and your loss of money may drop you from future participation in market activities – voluntarily.
So those hedge funds now crying on CNBC, and the political hacks calling for investigations to bail out your friends – ALL INVESTMENTS INVOLVE RISKS. THESE PEOPLE BEAT THEM AT THEIR OWN GAME. TAKE YOUR BALL AND GO HOME.
I believe in Milton Friedman, Thomas Sowell, and all of those who support free markets – along with sound money. What we have, is NOT a free market. And…much of this may be untangled this week and in the weeks to come. Those on the wrong side of history and are deeply short anything right now might want to have a conference call tomorrow at 8AM and think about how you plan on buying back all of which you “borrowed”. Because now it’s 7.2 million. In a few days it could be 10 million, and in a month it could be 50 million people coming for your stock certificates.
This revolution, and “wealth transfer” needs no government intervention. No socialist plan to give to the people. It appears the people want to take back what is theirs. A free market. Simply…step aside. It’s going to be wild and bumpy, but we’ll get through it, and not a single shot will be fired.
What we wish to do, it seems, is to make the markets free again.
The fundamentally strong case for silver
I have written about this on my site dozens of times, and you can check out my main page at renaissancement.org for many more articles going back over a year, but I’ll try and summarize here.
With silver – you have a commodity and money, wrapped into one. Silver is not only described as a “strategic metal” which is required for over 1,000 products, but is also listed in the constitution with gold as the only “money”.
Our forefathers knew the history of sound money, and knew that the downfall of civilizations started on the day they outspent their means. This leads to debt and debasement of currency. The ultimate fall of many civilizations is their ability to service debt.
With silver – it had been money in our system until 1964. Check your old dimes, quarters, and half dollars. They are 90% silver. What happened was – inflation. We started outspending our means, and we started losing money making the coins in our system. Therefore, dimes, nickels, and quarters today are worthless scraps of metal that the US deems “money”. But is actually currency.
Much longer story short, government went off of the gold standard in 1971 and opened the COMEX in 1974 to control the price of gold and silver. You see – these have been a harbinger for inflation. You start to see these go up, you lower interest rates, gold goes back down. Higher interest rates should trail inflation. This invites you to use your $1 to get $1.50 back, or whatever your rates are. Gold gives no yield, but protects your wealth by increasing with inflation.
Gold/silver have their value essentially measured by 10-year interest rates MINUS inflation rates. The CON GAME played has been to artificially suppress inflation to then justify lower interest rates. Meanwhile, inflation indexes online have shown 8-10% inflation for YEARS. This means the value of your dollar has decreased year over year.
This is why in 1956, you may have had a father owning a modest house, a stay at home wife, 3 kids, and a TV and a family car and they got by fine. Today, you have 3 parents working 50 hours a week, 2 cars, TVs in every room in the house, mega mansions at 3.5% interest, and not a dime in saving with 10-15% rising healthcare costs every year and 1-2% “cost of living” raises.
The fundamentals are staggering…
- REAL RATES – as a hedge against inflation, our 10 year has decline steadily over 40 years to near zero, while we have been battling 8-12% inflation every year for 2 decades. They lie about inflation because it means they don’t have to pay out more to social security and other programs and keep government worker costs artificially low. Meanwhile, this allows them to juke the 10-year lower to refinance our debt at lower rates every year. While REAL RATES now may be -1%, using the CPI – they are closer to -8%. As I heard someone say, “unwinding this silver short will be 40 years of gains in 4 months”. Meaning, silver will overshoot, then undershoot, then find a true free market price. $50? $100? $600? No one knows because of the 400 million ounce short. In 1980, the government pulled a Robinhood and said “sell orders only” to take $49 down to $8. The gold traders saw this and freaked. At the same time, Paul Voelker took interest rates to 20% to “combat inflation” and this had the effect of making the REAL RATES a positive 5%. Government will not acknowledge REAL inflation, so it seems the people are about to correct that problem for them. And this time – try pulling a Robinhood and only allowing sell orders? Oh – you also can’t raise interest rates past 1.2% or you crash the entire economy and default on debt.
- Supply/demand – there are thought to be 3 billion ounce of gold and silver above ground that are investment grade. Coins/bars, etc. Silver is found at 8:1 of gold, but is valued at 70:1 now. It exists at 1:1. What most people don’t realize is most silver is consumed every year in electronics, cars, TVs, bad aids – and it is small amounts that is not economic for recycling. And mine supply has decreased every year for the last 5 years. Lower grades, lack of investment capital in exploration due to lower prices, lack of mines that can operate profitable at $27 silver. Most silver is a byproduct of another metal, so you cannot just “dial up” silver mine supply. It can gradually increase year over year, but not week over week. Last year there was a 350 million ounce deficit. While there may be 3 billion ounces available – you have to ask…”at what price”. The ONLY silver that appears to be “sold” on COMEX is paper silver. Not physical. Could $50 silver unlock some of that 3 billion supply? Sure!! And that’s the FREE MARKET. But with paper traders having 200 days of supply trading on average every day, no one in their right mind is selling silver to a coin dealer at $27. Or $30. Or $40. $50 may be the magic number to shake supply loose. But – with 400 million ounces short, you are looking at a MASSIVE PRICE INCREASE to cover those shorts. Price will likely overshoot. Maybe hit $100. At $100 silver, and the commercial shorts gone, you may then have people bringing coins to dealers, melting down silverware, etc. $50 may then become a floor for many years to come. Of interest – this may also trigger a supply squeeze where manufacturers now place orders for a year instead of a month because they need the silver to make their products. An iPhone may use 1 gram of silver. So, silver at $27 is $1 of silver in the phone. If silver hits $100, that means there is $4 in silver in the phone. This is PRICE INELASTIC. The price of silver does not matter to Apple. They just need to get source, at any price, because it will not change the price of the iPhone. But, it will shut down production if they cannot find any.
- The green future. You need to understand, anytime anyone talks “green”, silver is involved. And they may not know it. Silver is the best electrical conductor. It is made into a paste and is a key component of solar panels. 1-2 ounces are in cars, and 2-3 ounces in electric vehicles in hundreds of parts regarding a car’s electrical and battery systems. 78 million cars sold last year and the auto industry uses 100 million ounces. Over the next decade, everyone talks about batteries and EVs and solar. That simply increases the demand. Period. With declining mine production and no one giving up their silver at $27, it forces a short squeeze AND a supply squeeze at once.
- COMEX. What many don’t realize is the COMEX took on deliveries of metals last year during COVID. No one could find supply, so the comex said, “come on in”. And, they did, indeed. So much that there are RUMORS that banks are threatening anyone with taking metals for delivery. Threats like blackballing, pulling credit, etc. They have supposedly been buying off hedge funds for months trying to take delivery and getting bought out at premiums. The problem is, the last couple delivery months, they have made deliveries on the LAST DAY of trading for the month. They like to claim there’s a lot of supply – but that “supply” is allocated silver not for sale. They “estimate” 50% COULD go up for sale. They have NO IDEA. They have played a lot of games, and kicked the can down the road – but free price discovery CANNOT be had with a 400 million ounce short. So the people seemed to say, “we got this”.
- Investment demand. In the 1970s, silver went up 29. The AVERAGE silver miner in the 1960s went up 165x. Not 165%, 165x. So right now we are at a time where the suppression appears to be over. Let’s call $11 the low for the last few years. IF silver were to rise with inflation and be set free from its shackles, this could suggest a $319 silver price by the end of the decade. Or – you can think perhaps that this inflation happened over the last decade and the price should be realized at $319 today. Who knows. But – there is investment demand there and many years you see 20-30% investment demand in silver. When silver price spikes to $50, many people turn in that silver and it is melted down to bars and sold to industry to then go into TVS and phones, etc.
There’s more here – but suffice it to say, the case here I could present was that the current system has been on its last legs for maybe a year. It had appeared that any month now the silver shorts could be broken. All this movement appears to be doing is pushing a domino that was already falling. This is not manipulating or cornering a market. Rather, it is removing a short that should not have been allowed by the government. Due to this, it will allow the price to trade freely again. Unclear how this could be illegal – but for anyone reading this, I’m not advocating any illegal action or investment advice, simply pointing out what I understand to be the current goings on in the system right now with WSB.
How I am playing this.
How is the best way I could play this? Lowest risk at top. This has the lowest return. Highest risk with highest return at the bottom. Remember, this is NOT investment advice and you should NOT replicate what I am doing as investment involves risk and you can lose significant money doing so.
- Physical. This is lowest risk, but has lowest return. Go to your coin shop and pay $4-$5 premium per ounce. (Update – heard all bullion dealers now out of silver as of last night) At $27, you are looking at $31-32 per ounce. You can also buy on Apmex, SDBullion, JMBullion, and many others. Go for American Silver Eagles, Buffaloes, or Maples. They are most recognized. You pay a higher premium for these. Junk silver bags are how I would play it if you plan on holding for $300 silver in 2026 or so. I have 50/50 mix of ASE and junk. If silver hits $100 per ounce, I’m taking my ASEs down to the coin shop. Not a penny less. $50? Don’t care. The physical silver I have is the ASSET OF LAST RESORT. Meaning, this is NOT my first asset to liquidate. If silver hits $100, you get about a 3x unrealized. Then, you must sell somehow. This requires a buyer. You can usually sell to an Apmex, who hedges their supply. Coin shops may have limited cash to pay you for your horde unless there are people wrapped around the block. In 1980 and 2011, there were stories of people in line making deals begging people on the way in to buy what they had. This may get to that. BUY FROM REPUTABLE SOURCES. American silver eagles do have some counterfeits out there. Don’t go to ebay unless it is a reputable dealer on there with thousands of transactions. Warning – as supply gets scarce, premiums go crazy. So if you see premiums over $4, start moving to the below options.
- Virtual physical. I bought OneGold silver when they dropped the price to $12. Backed the truck up and bought 1440 ounces. Sold around $19 before the explosion, because I used that money to then buy silver stocks which exploded even faster. There’s a premium on this, but it is tiny. You can then sell and get credit for the dollars to use at Apmex to get physical delivery – and you pay Apmex lowest premiums.
- Virtual physical ETFs. I have money now in PSLV, or physical silver, owned by Eric Sprott. Cannot do options on it because they legit have the silver. SLV may be a sham – many in my community feel it is leased out silver and shorted 10%, and used as a fractional reserve. I am throwing money to the cause by buying WAYYYYY OTM calls on SLV tomorrow. I may lose all of this bet. Don’t care.
- Streaming mining companies. These guys are the financier for miners. They give money for a % of the silver/gold mined for the life of the mine, not the company. They have incredible business models and as prices explode, so do their balance sheets. They do NOT MINE. Ideas here are Wheaton Precious Metals as the large silver one. I also have Sandstorm for gold. There are many streaming companies. The smaller ones like sandstorm have junior miners – and the torque will be massive when junior miners explode.
- Producers. I go with the largest producers of silver, by percent. First Majestic is the largest primary producer with 65% silver. Endeavor silver has 60%. Hecla and many of the big silver producers produce it as a byproduct – meaning it’s not going to massively affect their balance sheets. PAAS is a GREAT company, but it is NOT a silver company, despite the name. 23% silver production, 40% gold, the rest are base metals. Fortuna is of decent size, but is only 40% silver. First Majestic is also a target of the WSB due to the 24% short and saw prices go up like 40% this week. Could have a short squeeze party to $30 in the next few weeks – but who knows. I’m playing the silver market as a whole. I have too much invested in AG already. I feel majors could do a 4-5x if silver hits $50. If silver runs to $100, watch out for some 10x. You can count MAG on this, but it’s a low cost producer already, so $50 silver does not give you a 10x with them, but maybe a 2x.
- Junior producers I also have Americas Gold and Silver, Golden Minerals (silver producer from golden, Colorado), Impact silver, and SILJ – which is a basket of silver juniors and silver primaries that are much smaller than the Heclas. Juniors I feel will be a solid 10x with $50 silver. At $100 silver, you may see 20-50xs. Remember, this is NOT FINANCIAL ADVICE.
- Developers/pre-producers. After the money chases the producers and the juniors, they roll to where mines are about to come into play. See – mines decay each year as you take out supply. So this must be replenished. My top plays here are Discovery Metals, with 1 billion ounces in the ground. Silver One, Golden Minerals (who also have mines coming online), Alexco, and America’s gold and silver – who has a big silver mine coming online in the next few months (Galena). I also have GR silver, which should be producing in 2022/2023 or be sold. I don’t own silvercrest but it is due to open in 18 months and is HIGHLY sought after.
- Explorers. These have resources or pieces of ground and they drill holes. Big miners cut their exploration budgets a decade ago, so they rely on small companies to find resources and prove them out. These are HIGH RISK. However, these things may be valued at $.25 – .50 per ounce of silver right now in the ground. At $100 silver, you may get a 100x with some of these. Reyna silver is my top explorer – these resources used to be part of MAG and are adjacent, and needed to be sold to fund the mine for MAG. Same PhD who found it is now leading the exploration team. Could be another MAG, which is now trading at $20. Reyna is at $.80. That can be a 25x at $27 silver. At $100 silver in 3-5 years this could be a 100-200x. OR – it could go to zero. Blackrock gold, should actually be called Blackrock silver. Lots of buzz on this.
So there you have it folks. Looking forward to an interesting week ahead. I feel you are caught up and armed with all of the info you need to understand the battle that began on Thursday.
January 31, 2021 at 9:09 pm
I almost bought into the gamestop market several months ago – ALMOST –
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February 1, 2021 at 1:18 pm
I wanted nothing to do with the GME stuff. $5 value for the stock trading at $350. Going to end badly for a lot of people. Silver was a $25 per ounce price that is worth perhaps $100 with a fair free market.
February 1, 2021 at 2:24 pm
Well yes of course it will.
My reasoning for NOT buying months ago – I just don’t imagine the business staying (uhh) in business due to people getting away from buying store bought and moving toward downloads. Of course that’s my thinking. This quick rise may be good for a day trader but I buy stock for the long term.
February 1, 2021 at 5:51 am
Something people seem to be missing – there was no supply for a long time this summer, and it was still aggressively shorted and took a long time to move up. Sure, it did, but buying physical silver coins isn’t that big of a part of the silver market. Same with going long SLV. Can’t the fund managers just create more and more shares of SLV which allows it to be shorted into oblivion, which will completely erase and bump the demand for coins/bars might bring?
with GameStop you had an existing float of shares. A defined amount that you can see. And it was a relatively small company, so a de centralized group an easily buy up everything out there, even if it’s small investors buying up 20 shares each, as long as there’s a lot of them. But there is no limit to how much SLV there is on existence, correct? As long as they are allowed to trade and short nonexistent metal I fail to see how this could possibly work. What am I missing here? I’m sure plenty of you know a lot more about this than I do, but that’s how I see it. I am, and will always remain, long physical silver and I wish these guys and everyone else luck and do hope they succeed, but given what I wrote above, unless I’m completely off on that, I don’t see how they could.
February 1, 2021 at 1:16 pm
Carl – SLV prospectus has nothing to do with silver futures. The “unlimited” feature is silver futures, but when they create them, people are buying them with anticipated delivery in march. So it has a short term effect of driving down price with the long term effect they will have to supply the metal in march. SLV creates shares to add metals to the trust based on people buying SLV shares.
One thing to note. “no supply” isn’t accurate. 3 billion ounces out there. “at that price” is more accurate. No one is selling physical at $30. At $50, some may come loose.
February 1, 2021 at 8:41 am
Pan American Silver is a better play than First Majestic as they produce more than double the silver each year than First Majestic. Using percentages doesn’t tell the story.
February 1, 2021 at 12:53 pm
Mike – with respect, I love PAAS as a well run company. But you are confusing volume with percent of revenue. PAAS only produces 23% silver and 40% gold, with the rest as base metals. First Majestic produces 65% of their revenue from silver, or about 3x that of PAAS. Point is, if silver goes up to $50, the torque on profits for AG are 3x that to PAAS with respect to revenue generation. I get this all the time. PAAS has silver in their name, but they are NOT a primary silver producer. I also have Newmont over Barrick due to their mass amount of silver over Barrick – Barrick beats Newmont on copper, so when PMs die down and copper picks up strong, I will rotate from NEM to Barrick.