Is this GameStop bubble dangerous to the global financial system?

Reddit Preparing To Unleash "World's Biggest Short Squeeze" In Silver
BY TYLER DURDEN
SATURDAY, JAN 30, 2021 - 15:30
While all eyes have been focused on GameStop and a handful of other heavily-shorted stocks as they exploded higher under continuous fire from WallStreetBets traders igniting a short-squeeze coinciding with a gamma-squeeze, the last few days saw another asset suddenly get in the crosshairs of the 'Reddit-Raiders' - Silver.
On Thursday, we asked "Is The Reddit Rebellion About To Descend On The Precious Metals Market?" ... One WallStreetBets user (jjalj30) posted the following last night:
Silver Bullion Market is one of the most manipulated on earth. Any short squeeze in silver paper shorts would be EPIC. We know billion banks are manipulating gold and silver to cover real inflation.
Both the industrial case and monetary case, debt printing has never been more favorable for the No. 1 inflation hedge Silver.
Inflation adjusted Silver should be at 1000$ instead of 25$. Link to post removed by mods.
Why not squeeze $SLV to real physical price.
Think about the Gainz. If you don't care about the gains, think about the banks like JP MORGAN you'd be destroying along the way.
...

Tldr- Corner the market. GV thinks its possible to squeeze $SLV, FUCK AFTER SEEING $AG AND $GME EVEN I THINK WE CAN DO IT. BUY $SLV GO ALL IN TH GAINZ WILL BE UNLIMITED. DEMAND PHYSICAL IF YOU CAN. FUCK THE BANKS.
Disclaimer: This is not Financial advice. I am not a financial services professional. This is my personal opinion and speculation as an uneducated and uninformed person.
...and judging by the unprecedented flows into the Silver ETF (SLV) they just got started...
SLV saw inflows of almost one billion dollars on Friday, almost double the previous record inflow for this 15 year-old ETF.


Sold out kraken!

View attachment 451020
I went To Buy 250 coins ...it was fine....I didn't have enough in checking account transaction declined! I was short 3 grand...... derp.I fuckin moved money.. .....it was less than 10 minutes ....sold out lol...they were just there ......



I hope the article is right. I own a lot of silver.

The gist of the article is that the silver futures market is highly leveraged to the physical silver market, which is true. The article estimates that for every $250 of silver futures outstanding, there is only $1 of actual silver. If owners of silver futures start demanding physical silver when their contracts expire - which is their right - then those who sold them the future would have to go into the market and buy the physical silver for delivery, of which there is not enough. This would cause the price of silver to soar higher.
Reddit Preparing To Unleash "World's Biggest Short Squeeze" In Silver
BY TYLER DURDEN
SATURDAY, JAN 30, 2021 - 15:30
While all eyes have been focused on GameStop and a handful of other heavily-shorted stocks as they exploded higher under continuous fire from WallStreetBets traders igniting a short-squeeze coinciding with a gamma-squeeze, the last few days saw another asset suddenly get in the crosshairs of the 'Reddit-Raiders' - Silver.
On Thursday, we asked "Is The Reddit Rebellion About To Descend On The Precious Metals Market?" ... One WallStreetBets user (jjalj30) posted the following last night:
Silver Bullion Market is one of the most manipulated on earth. Any short squeeze in silver paper shorts would be EPIC. We know billion banks are manipulating gold and silver to cover real inflation.
Both the industrial case and monetary case, debt printing has never been more favorable for the No. 1 inflation hedge Silver.
Inflation adjusted Silver should be at 1000$ instead of 25$. Link to post removed by mods.
Why not squeeze $SLV to real physical price.
Think about the Gainz. If you don't care about the gains, think about the banks like JP MORGAN you'd be destroying along the way.
...

Tldr- Corner the market. GV thinks its possible to squeeze $SLV, FUCK AFTER SEEING $AG AND $GME EVEN I THINK WE CAN DO IT. BUY $SLV GO ALL IN TH GAINZ WILL BE UNLIMITED. DEMAND PHYSICAL IF YOU CAN. FUCK THE BANKS.
Disclaimer: This is not Financial advice. I am not a financial services professional. This is my personal opinion and speculation as an uneducated and uninformed person.
...and judging by the unprecedented flows into the Silver ETF (SLV) they just got started...
SLV saw inflows of almost one billion dollars on Friday, almost double the previous record inflow for this 15 year-old ETF.


Sold out kraken!

View attachment 451020
I went To Buy 250 coins ...it was fine....I didn't have enough in checking account transaction declined! I was short 3 grand...... derp.I fuckin moved money.. .....it was less than 10 minutes ....sold out lol...they were just there ......



I hope the article is right. I own a lot of silver.

The gist of the article is that the silver futures market is highly leveraged to the physical silver market, which is true. The article estimates that for every $250 of silver futures outstanding, there is only $1 of actual silver. If owners of silver futures start demanding physical silver when their contracts expire - which is their right - then those who sold them the future would have to go into the market and buy the physical silver for delivery, of which there is not enough. This would cause the price of silver to soar higher.
We're about to find out ..I was able to snatch up some 1 and 1.5s

Update (1100ET): For some background on just how unprecedented this weekend's action in silver markets is, Tyler Wall, the CEO of SD Bullion writes the following (emphasis ours):

In the 24 hours proceeding Friday market close, SD Bullion sold nearly 10x the number of silver ounces that we normally would sell in an entire weekend leading to Sunday market open.
In a normal market, we normally can find at least one supplier/source willing to sell some ounces over the weekend if we exceed our long position (the number of ounces we predict we will sell over the weekend).
However, everyone we talk to is afraid of a gap up at Sunday night market open.
This is about ready to get really interesting as there was very little inventory left from suppliers/mints going into Friday close.
Our direct AP supplier informed us after close on Friday that the "US Mint will be on allocation for the remainder of Type 1" (Current Silver Eagle Design).
Our sales for the month of January exceeded any one month last year during the heart of the pandemic. It was an all-time record month in our company history.
And, perhaps most importantly, as QTR tweets so succinctly, "this is a red pill moment for many, and it's beautiful."



* * *

Update (1030ET): It would appear the run on silver has begun. With the market closed, traders have rushed to secure some exposure to silver ahead of what WSB suggests could be "the world's biggest short squeeze" and that has left bullion dealers

As we noted below, the premium for physical silver had soared late Friday and into Saturday (after the massive flows into SLV), but as Sunday rolled around, bullion dealers are now facing massive shortages of physical coins.

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The gist of the article is that the silver futures market is highly leveraged to the physical silver market, which is true. The article estimates that for every $250 of silver futures outstanding, there is only $1 of actual silver. If owners of silver futures start demanding physical silver when their contracts expire - which is their right - then those who sold them the future would have to go into the market and buy the physical silver for delivery, of which there is not enough. This would cause the price of silver to soar higher.
Sounds like a great target for a short squeeze, then. Probably why it was chosen: a lot of these Reddit Rebels are highly self-educated and know what they are doing. People are never quite as stupid as everyone else wishes.

The Reddit gang are just running their own pump and dump operation, manipulating the market themselves.
 
Hey guys, your opinions on the issue of peril to the U.S. and/or global financial system with this wild and large sudden bubble?

I noted that just yesterday the bubble idea spread to Australia and quickly to Asia and Europe: it IS quick, very quick, money, if you luck out. But the Wall Street Journal said this morning that some $19 billion has been lost by hedge funds: that is serious money. The only way to make money in the stock market, I read years ago, is to take it from someone else. The small investors are now taking it from the big investors, and how.

Big money moving rapidly across the whole world --- what could go wrong with that? Well, last times it happened, the Russian collapse and the Asian financial crisis, it was a problem.

And I notice that the Fed, the Sec., and the White House (as well as their running dogs, the big social media outfits and trading companies) are taking alarm and running around trying to stop this, with so far no effect. If they are worried, I am at least somewhat worried ----- because by the time these people got worried in 2008 it was time to worry, and well past time.
What happens to all those investors, when Game Stop stock valuations go back to what they're really worth? It may have been fun, but I hope not too many have "invested" more than they can lose.
The hedge fund cries out in pain as it shorts you.
 
In the 24 hours proceeding Friday market close, SD Bullion sold nearly 10x the number of silver ounces that we normally would sell in an entire weekend leading to Sunday market open.
In a normal market, we normally can find at least one supplier/source willing to sell some ounces over the weekend if we exceed our long position (the number of ounces we predict we will sell over the weekend).
However, everyone we talk to is afraid of a gap up at Sunday night market open.
This is about ready to get really interesting as there was very little inventory left from suppliers/mints going into Friday close.
Our direct AP supplier informed us after close on Friday that the "US Mint will be on allocation for the remainder of Type 1" (Current Silver Eagle Design).
Our sales for the month of January exceeded any one month last year during the heart of the pandemic. It was an all-time record month in our company history.
And, perhaps most importantly, as QTR tweets so succinctly, "this is a red pill moment for many, and it's beautiful."

Yeah, Bloomberg is saying right now (1/31 5:47 PM) that there is a big run on silver ---- internationally.

I bet it won't be the only stock or commodity that runs as of tomorrow morning --- internationally.
 
In the 24 hours proceeding Friday market close, SD Bullion sold nearly 10x the number of silver ounces that we normally would sell in an entire weekend leading to Sunday market open.
In a normal market, we normally can find at least one supplier/source willing to sell some ounces over the weekend if we exceed our long position (the number of ounces we predict we will sell over the weekend).
However, everyone we talk to is afraid of a gap up at Sunday night market open.
This is about ready to get really interesting as there was very little inventory left from suppliers/mints going into Friday close.
Our direct AP supplier informed us after close on Friday that the "US Mint will be on allocation for the remainder of Type 1" (Current Silver Eagle Design).
Our sales for the month of January exceeded any one month last year during the heart of the pandemic. It was an all-time record month in our company history.
And, perhaps most importantly, as QTR tweets so succinctly, "this is a red pill moment for many, and it's beautiful."

Yeah, Bloomberg is saying right now (1/31 5:47 PM) that there is a big run on silver ---- internationally.

I bet it won't be the only stock or commodity that runs as of tomorrow morning --- internationally.

This is where the money is now, in bubbles, not in the real economy, which has been stagnant since 1973. That's why gold is so annoying to the Wall Street rooks and their politician employees; it's hard to regulate, and anybody can buy some and hoard it.
 
This is where the money is now, in bubbles, not in the real economy, which has been stagnant since 1973. That's why gold is so annoying to the Wall Street rooks and their politician employees; it's hard to regulate, and anybody can buy some and hoard it.
That's right, I agree. It's soaring into bubbles, and not just in the U.S. I'm saying when this happens, big bubbles, it can crash whole economies, whole banking systems. Hold on to your hat.
 
The gist of the article is that the silver futures market is highly leveraged to the physical silver market, which is true. The article estimates that for every $250 of silver futures outstanding, there is only $1 of actual silver. If owners of silver futures start demanding physical silver when their contracts expire - which is their right - then those who sold them the future would have to go into the market and buy the physical silver for delivery, of which there is not enough. This would cause the price of silver to soar higher.
Sounds like a great target for a short squeeze, then. Probably why it was chosen: a lot of these Reddit Rebels are highly self-educated and know what they are doing. People are never quite as stupid as everyone else wishes.

The Reddit gang are just running their own pump and dump operation, manipulating the market themselves.

My guess is that the Reddit gang will have a few more concerted efforts, then break up into factions, each one aiming at a different target. This will dilute their effectiveness.
 
No. It's not a systemic event.
Why not? The Railway Mania in 1845 certainly was --- the British financial system was days away from a system of barter, a Bank of England spokesman said later. Many, many banks collapsed. Like during the 2008 crisis large banks collapsed and the rest froze up all over the world and money stopped moving. Now the Reddit Rebels are piling into silver: I am not convinced that none of these huge money moves matter.

I saw on the tape that Goldman has a piece out this morning saying it might be, but I'm skeptical.

The reason why it's not systemic is because there isn't much leverage on the short side. There's a lot of margin on the long side, but not on the short side. Leverage is what makes it systemic. Short interest in aggregate is quite low. The stock market might go down a bunch as hedge funds de-gross, but that's different than equity being wiped out in the banking system.

Margin leverage is fairly small relative to total credit in the system. And margin leverage isn't supplied by the banking system. It's ringfenced within financial institutions to the broker. That's different from the Railway Panic, the 1907 Crash, 1929, and the GFC, and even the pandemic last March, where credit was supplied directly by the banking system.

The only analogy would be the Tech Bubble, but that generated a mild recession when it crashed and wasn't a systemic event.
 
The gist of the article is that the silver futures market is highly leveraged to the physical silver market, which is true. The article estimates that for every $250 of silver futures outstanding, there is only $1 of actual silver. If owners of silver futures start demanding physical silver when their contracts expire - which is their right - then those who sold them the future would have to go into the market and buy the physical silver for delivery, of which there is not enough. This would cause the price of silver to soar higher.
Sounds like a great target for a short squeeze, then. Probably why it was chosen: a lot of these Reddit Rebels are highly self-educated and know what they are doing. People are never quite as stupid as everyone else wishes.

It might happen, but it's harder to squeeze commodities since there is no limitation on how much one can short as long as you can maintain margin balances. What will happen is if silver gets too high, the miners will come in and short sell their production.

That doesn't mean you can't see a wicked spike upwards. But the analogy to stocks isn't quite the same.
 
Margin leverage is fairly small relative to total credit in the system. And margin leverage isn't supplied by the banking system. It's ringfenced within financial institutions to the broker. That's different from the Railway Panic, the 1907 Crash, 1929, and the GFC, and even the pandemic last March, where credit was supplied directly by the banking system.
I think what you are saying here is a good point, and important, and I hope you are right.
 

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