What do Silver and Gamestop have in common?

Last week Gamestop was the pinball of small private investors that started at the reddit forum named Wallstreetbets. It quickly became very popular among people with interest in finance. But the Gamestop idea quickly grew because other people wanted a piece of the action. The idea was to blow up Gamestop’s stockprice to $1.000 to try to make sure that some shortsellers went bankrupt on their trade of gamestop. It worked partially. Gamestop went up to $300 and the shorters had to close part of the position with a loss. Now they have their eyes on the silver price. Trying to push it up. Some users on the forum believe that banks and other financial institutions are trying to manipulate the silver price and bring it down.

After the succes of gamestop they wanted to use the power of the community to make the silverprice jump. But that is a whole different ballgame. Trying to push up the stockprice of a small company is much easier because of the limited supply of shares. But the silver price is compossed of so many different variabels that it is practically impossible.

The silver trade started last week and during the weekend much was said about it. Monday the silverprice rose to the highest level in 8 years. It jumped 12 percent. And according to VandaTrack which collects data from major brokerages small private investors (aka retail money) have bought the iShares Silver Trust for over 90 milion on Monday,

But Tuesday the fun was over and the price corrected again. Silver fell 8 percent to $27 per ounce. We believe that this was it for the redditers and wallstreetbets forum. They do not have the buying power to sustain the push.

Even the financial times wrote about it today.: “The rally in the price of silver fuelled by a sudden burst of interest from the private small (reddit) traders rapidly unwound on Tuesday, with many veteran investors left scratching their heads over the episode. Silver fell to $27 an ounce, after leaping 12 per cent the previous day to the highest level in eight years. The London Bullion Market Association, which oversees the silver market, said more than 1bn ounces of silver was traded on Monday, more than three times the average towards the end of last year. The pullback underlines the difficulties facing small investors, even when they combine forces, in influencing the global silver market, where $6bn worth of the metal changes hands in a typical day. It also reflects growing pushback on the internet forum Reddit against the effort to push up silver prices — a strategy posed by a user last week.” The rush into silver started on Thursday last week as the subject began picking up steam on online discussion sites. One user on Reddit suggested buying it to put a “squeeze” on banks. The post in the WallStreetBets forum said it would be “incredible” to make large banks active in the futures market “pay dearly” for their supposed bets that the silver price will fall, mirroring the successful campaign among amateur traders to fire up the share price of consoles retailer GameStop. Professional analysts and traders quickly questioned the strategy. Unlike GameStop, which had been the target of negative bets among hedge funds, there was no large short position in silver futures. In fact, speculators were net long the metal, meaning they were betting on prices rising.

Source FT.com : “Silver price retreats”

“Anyone buying silver should know that it’s called ‘the devil’s metal’ for a reason,” Trying to manipulate or even controll the direction of the price is almost impossible.

Over the Wiseguy

Stock trader, Owner and Administrator of "the-wiseguy.com". . . "TA is like surfing. You don't have to know a lot about het physics of tides to catch a good wave. You just have to be able to sense when it's happening and have the drive to act at the right time"

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