Saturday , May 8 2021
Home / Acting Man / Reddit Residue on Silver

Reddit Residue on Silver

Summary:
Silver Yo-Yo The price of silver is going up and down like a yo-yo. On Sunday and into the first part of Monday, the price skyrocketed on news that Reddit was touting the metal. But as the data clearly showed, the price was not driven up by retail buying of physical metal. Silver, March futures from Jan 27, 30 minute chart: a lot of volatility, but silver seems to have established a higher low after coming down from the initial spike. [PT] To be sure, there was retail buying. But even if they depleted the finite inventories of Eagles and Maples, they were not the buyers that pushed the price up to . That would be the futures speculators. Speculators use the futures market because it offers great leverage. But leverage gives them

Topics:
Keith Weiner considers the following as important: , ,

This could be interesting, too:

J. B. writes India’s Experiments with COVID-19

J. B. writes Diversity or The Bigotry of Low Expectations

Bill Bonner writes Dawn of the Dead in the United States of Voodoo

M. G. writes Did You Make Janet Yellen Rich?

 

Silver Yo-Yo

The price of silver is going up and down like a yo-yo. On Sunday and into the first part of Monday, the price skyrocketed on news that Reddit was touting the metal. But as the data clearly showed, the price was not driven up by retail buying of physical metal.

Silver, March futures from Jan 27, 30 minute chart: a lot of volatility, but silver seems to have established a higher low after coming down from the initial spike. [PT]

To be sure, there was retail buying. But even if they depleted the finite inventories of Eagles and Maples, they were not the buyers that pushed the price up to $30. That would be the futures speculators.

Speculators use the futures market because it offers great leverage. But leverage gives them itchy trigger fingers, and they will sell to take profits or stop losses at any time.

That time began around 15:00 GMT Monday, and lasted through 6pm Tuesday. On Tuesday alone, the price dropped two bucks.

The Retail Buyers

The premiums on retail silver products were high on Tuesday, showing that retail buying persisted. Though it must be noted that they dropped later in the day.

Retail can buy a lot of silver—eventually—but they are drinking through a fairly narrow straw. We refer to the limited manufacturing capacity of coins and other precision-minted products. If high retail demand persists, then high premiums will sooner or later incentivize mints to buy more equipment. We shall see how long this latest wave of demand endures.

Here is a graph of Tuesday’s silver market action.

Close-up of Tuesday’s action in silver…

The basis drops from 3% to 1%. This selling, like the buying before it, was predominantly in the futures market. The speculators dove in with both feet, tread water for a brief moment, then leapt out of the pool again.

What’s Next?

The direction of the next move—and its durability—now depends on retail buyers.

If they keep buying, undeterred or even spurred on by this price drop, then silver metal will become more scarce in the global market. And the price will rise. And the speculators will likely jump in again, but perhaps be less twitchy to get out.

Fear of Missing Out can be a powerful motivator. Then we could easily see a move to $40 or more. But if retail buyers have had their fill of volatility, and/or Reddit moves on to the next thing, then we are back to the silver market of mid-January.

© 2020 Monetary Metals

Charts by barchart.com, Monetary Metals

Chart annotations and image captions by PT where indicated

Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.

 

 

Emigrate While You Can... Learn More

 


 

Reddit Residue on Silver 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

     
Keith Weiner
Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He writes about money, credit and gold. In March 2015 he moved his column from Forbes to SNBCHF.com.

Leave a Reply

Your email address will not be published. Required fields are marked *