Silversqueeze: A battle for hot blood
Where they drill for silver, chips fall
When the Gamestop stock took off into space last week, the world financial system tilted. Hedge funds had to bail out hedge funds with billions, professional fund managers got bloody noses, regulators looked on helplessly, the media remained largely silent for lack of simple explanations for a completely new phenomenon.
Meanwhile, for the sake of clarity, the judiciary is investigating a case of "corruption", but the new U.S. President Joe Biden and his new Treasury Secretary Janet Yellen are already facing a new problem: Under #silversqueeze, the neotraders so successful at Gamestop are meanwhile gathering to repeat their triumph, which cost the hedge fund Melvin Capital half its assets within days.
What seemed like a game at the beginning has become bitterly serious. The silver market is not only much bigger than the narrow market around the problem stocks that have been targeted so far. It is also much more significant for the global economy. Proclaimed price targets of $1000 - currently silver is still below $30 - would have a devastating impact on supply chains, manufacturing processes and semi-finished products ordered.
Especially the hybrid position of silver as half industrial material and half gold substitute would have consequences for platinum, palladium within hours and probably for all other metals within days. And in the future, it would probably no longer be possible for anyone to bet on overvaluations on the stock exchanges: The silver squeeze could thus become the signal for a high-altitude rush for all asset classes, the likes of which the world has never seen before.
What is certain is that the established players will do everything to prevent this. But it is also certain that they are far from certain to succeed. It will be exciting tonight when Asia takes the lead. Tomorrow, it will be clear who will experience their silver miracle. And who might be happy to have escaped with a black eye.
Posted Using LeoFinance Beta
