Day: February 7, 2022

The Silver Squeeze – One Year Later

One year ago there were some dramatic and exciting events in the silver markets.

It was a silver squeeze, which many of you may remember well. Let’s revisit what happened and then we’ll examine what’s happened since.

In the first week of January 2021, silver peaked at around $27.50, then quickly sold off to about $24.50 on US dollar strength. For the next three weeks, it hovered around the $25 – $26 level. Then, on January 28th, silver spiked to $26.50, then rose further. Here’s what I wrote about these events in the 2021 February issue:

It was a call-to-action by the now infamous WallStreetBets (WSB) Reddit community, which had essentially told its followers to buy GameStop shares and call options, and other shares in order to squeeze out the big short positions held by hedge funds.

Then In the last couple of days of January, a WSB Reddit subpost essentially told its readers/followers/members to buy the SLV silver ETF to effect a squeeze on paper silver shorts.

Reddit’s Wall Street Bets (WSB) has a new subreddit titled: ‘The biggest short squeeze in the world $SLV Silver $25 to 1000$.’ Here’s the post:

By all accounts, followers bought SLV,

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Troubles In Tech-Land Might Matter Most

Another week, another frenzy of forecasts on what the Fed will do.

Powell’s comments from last week’s meeting were taken as hawkish, setting gold back (it seems the market is refusing once again to acknowledge that gold gains alongside rates once a hiking cycle beings), hurting stocks, and lifting the dollar. Then four Fed governors emphasized in speeches that they do not expect to be aggressive or surprising as they tighten. Everything reversed.

I believe the Fed will avoid surprises at almost all costs. They’ve spent the last decade establishing trust with the markets that they will telegraph their intentions clearly. On that basis, I tend to believe what they say.

But they have to tighten because inflation at 7% steals half your wealth in 10 years. And loss in spending power because wages fall behind inflation can derail an economy based 70% on consumer spending pretty easily.

I have been characterizing the Fed’s task as threading the needle: they must tighten enough to tame inflation without suffocating growth or upending the markets.

That’s not an easy task. In fact, when I considered that task last fall I thought it almost impossible, which led me to think that a

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