Looking for Crazy Action in Silver Markets

I have held physical silver for many years with no intention of selling–on the other hand if someone wants to pay me a crazy high number (not sure what that would be–$100?) I might let it go.

Like Gamestop (GME) last week there is apparently a move to buy silver–physical silver and I suspect some miners. A short squeeze on the SLV ETF is mentioned-I suspect there are some penny mining stocks where there might be opportunity.

The silver ETF saw buying equivalent to 1150 tons of silver late last week. I checked my traditional supplier and they have little for sale and shipping is delayed 5-10 days. They had 1 issue of silver eagles available at $76/coin which is way beyond where the 1996 issue should be trading.

Anyway I see silver futures at $27.06 right now which is up a bit over a dollar.

As an income investor do I care? I care about any potential disruptions in markets—I don’t care what silver does (unless it goes to $100 or so and then I will gather my physical silver and bank a 1000% profit), but these things have a potential to spill over elsewhere.

We shall wait and see if anything evolves from here. Most likely this would simply be a ‘sideshow’ for income investors, but we shall see soon.

21 thoughts on “Looking for Crazy Action in Silver Markets”

  1. a lifetime ago I trade silver options on the comex floor. Silver has always been known for extreme moves. i remember seeing spot silver move 40% in about 20 minutes back in the 80’s (several years after the hunts tried to corner the market)

  2. Tim,
    Really appreciate this post on a current, though not directly related to income investing, topic. I guess no investing style is an island . . . it’s all related.

    1. Tim mentioned silver at $100. might get his attention. my wife got her fathers when her mother passed away. He had un- circulated peace dollars in rolls from a banker buddy. Also quite a few Morgan’s and walking Liberties back to the 1880’s . I took a handful to a gun show and had lots of interest, said they were worth 50 bucks maybe more, I’ve always leaned “maybe more”
      Whats the best way to maybe liquidate some if we get to Tim’s target number?

  3. I was lucky enough to be in the right place at the right time this week. I have owned boring Tootsie Roll stock TR for a couple decades, appreciating the regular quarterly dividend and annual 3% stock dividend on top (5% yield) , waiting for the buy-out eventually. It is so stable that I considered it a bond like investment. This week it rose from $28 as high as $59 because it has a great amount of short interest. I actually felt this was just the long awaited buy out news leaked…I was surprised to find TR in the top 10 shorted stocks in the NYSE. I am no dummy and was lucky enough to sell out around $56 for about half of my holdings, and I sold call options for March pocketing another $8.50 a share to protect about 25% of the rest of my 4900 shares. This stuff is crazy and if anybody sees a windfall I think they should really consider this their opportunity to sell before some sort of regulation falls down.

    A lot of steak dinners for sure.

    1. I had a similar experience last week trading H&R Block (HRB) which was bought and sold in less than 10 trading days for a 37% gain. That wasn’t the plan going in, but when an opportunity presents itself you’ve got to take it.

  4. Has anyone NOT done this in the past weeks:

    Ok, on Mar 30, 2020 I sold all my positions, moved over to INBR, picked up 100% margin, and spent every dime on GME at $2.80. Then, with my natural ability to pick bottoms and tops, sold it all at $400 in the past month.
    What would I have?

    1. India issues SGBs, sovreign gold bonds with a death call and periodic retraction. It is cashed out, in Rupee, or rolled, on a three day average on a specific future date. I will find and put the link here:
      https://m.rbi.org.in/Scripts/FAQView.aspx?Id=109
      Remembering that holders had to be residents, but there may be an intermediary. There are banks in US that are India focused. One bank said yes, but department shut down right now. The one in Chicago was also shut down, even email, when I contacted them several months ago and never got more info.
      Interesting this comes up again.

  5. Tim said: “Most likely this would simply be a ‘sideshow’ for income investors, but we shall see soon.”

    Tim, I agree the most likely outcome is that this will be a sideshow for income investors. However, there is a non-zero percent change it turns anywhere from slightly bad to real bad very quickly. It is possible that RobinHood has to get bailed out today before the open tomorrow. They might not be able to meet their collateral requirements imposed by DTCC. If that happens, either they get a Long Term Capital Management bailout or all hades breaks loose. If either of those happens, it will likely spillover into ALL of “our” markets. As we learned in the Covid meltdown last March, we are NOT immune, even if we think the default probabilities of our income investments has not worsened. RobinHood apparently blew through ~ $1.2 BILLION on Thursday and Friday and did not have enough to open trading on 51 stocks. They are limiting purchases to 1 to 5 shares, which tells you the brokerage is in trouble. And if RobinHood messes up, it could easily spread unless the feds step in.

    Not the most likely scenario but you might want to have a plan if some disruption occurs.

    1. Tex,
      Your explanation makes sense, especially if RH doesn’t have the actual stock shares it has been shorting or ability to provide them to buyers from sellers.
      What I read on SA was they were limiting not only how many you could buy to 1 to 5 shares but that included what you held. So if you already had 5 you couldn’t buy more.
      Also read a lot of people had already transferred their accounts or were planning to. Now what happens when you get Reddit traders in Schwab, Fidelity, and internet broker?

  6. Over on Wallstreetbets they removed the original Thursday post using people to buy SLV and AG. Supposedly they think the hedgies are trying to trick them into buying it because the hedgies are long silver. By the way, I agree the hedgies are long silver – it’s the banks (and some producers who hedge) who are usually short. So this may go no where. Even so, the word is out there so maybe plenty of non-WSB guys get into the game. Even if WSB doesn’t push this or follow through we are seeing amazing tightness in the physical silver market – none of the major retailers are selling this weekend as they are either out of inventory or concerned about a major price spike at the open. And if I was a big hedge fund who was long silver I would definitely try to pump it and let WSB take the hit for manipulating the market. Bottom line, be careful out there and if you have a little more silver than you need, it might be a good time to take some partial profits on a big pump.

  7. I own some SLV from awhile ago. I’ll gradually sell it off if it shoots up. I’m a trader not a revolutionary.
    A lot depends on how much silver was sold that doesn’t exist. If it’s a lot then this a serious disruption on many fronts. If it’s not much then this is a pump and dump. I don’t know the answer.

  8. Tim,
    This has the potential to spill over into all the markets. People I don’t think are taking it seriously yet.
    Just finished reading Jeff Miller over on SA and most of the comments leaned towards what the Reddit crowd is doing isn’t part of the larger market.
    You probably read the same thing on Silver over on SA that I read about.
    Quite honestly, with the liquidity in dollars and the imaginary value of bitcoin and other cryptocurrencies I could see the Reddit crowd try something like the Hunt Bros in early 80’s
    Where it would end and how it would affect preferred’s I have no idea

    1. 3-5 million people on Reddit are going to have a hard time moving the needle on silver. They need to buy physical quantity equal to production roughly 2250 tonnes/mth.

      As the commodity price increases miners will increase production which is happening now in gold.

      The one thing that is pretty scary is the amount of paper silver that exists to amount of physical in the world.

      1. Its only reddit users. …is just fake news. IMO it’s institution vs institution with a side show of retail. IBD had a write up on 7 large institutions that benefited from GME. They aren’t RH investors. Look at volume for top 15 shorted stocks past 3 trading days over 200 billion. The tape alone proves thats hedge vs hedge

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