Silver Squeeze?

MRAll134

Kingfisher
Do you think going for coins with numismatic value is really a good idea if you're just trying to own silver? I had someone ask me about buying silver dollars recently and suggested just going for circulated 1964 dimes and quarters because they have the lowest mark up (here in the US silver dollars go for almost twice the melt value).
Everybody collects silver for different reasons. For me, I don't like collecting "junk silver." It takes up a lot of space, weighs a lot, does not look good, resale would not be easy etc. I like picking up pieces that have low mintage and the artwork looks good. Plus, I like the inherent value that silver has, despite the price being suppressed.

This is an example of something I would recommend getting invested in (too late on this one though). This Black Flag has a mintage of 15K and has already gone up 200% since its release: https://www.ebay.ca/itm/2020-1-Oz-S...RTUNE-Black-Flag-Black-Bart-Coin/283927532201
 

uncledick

Woodpecker
Do you guys have any recommendations for silver/gold miner stocks that are up and coming, with a current price of less than 5$ a share? I recently got some DSV.VN (discovery metals) shares and the gains have been pretty good. Anything else like it? I got my eye on harmony gold stocks, not sure if I want to dive into gold stuff yet though.
 
Anyone care to weigh in on this WSB thread? The silver short squeeze is glaringly obvious to anyone paying attention to the data, the evidence is overwhelming, just take a look for yourself, PSLV.

5last6ye4mi61.png

*feb 2021 is ongoing and continues to rise
 

bucky

Ostrich
Everybody collects silver for different reasons. For me, I don't like collecting "junk silver." It takes up a lot of space, weighs a lot, does not look good, resale would not be easy etc. I like picking up pieces that have low mintage and the artwork looks good. Plus, I like the inherent value that silver has, despite the price being suppressed.

This is an example of something I would recommend getting invested in (too late on this one though). This Black Flag has a mintage of 15K and has already gone up 200% since its release: https://www.ebay.ca/itm/2020-1-Oz-S...RTUNE-Black-Flag-Black-Bart-Coin/283927532201
True about different people being into silver for different reasons, but I think what you're talking about is investing in numismatic value, which is very different from investing in the metal itself. Not that there's anything wrong with it, it's just a different game.

For what it's worth I like the look of old, circulated coins a lot more than modern bullion, but again, that's just a matter of taste.

Is it true that it's hard to sell "junk silver"? It's been over a decade since I've sold any, but IIRC I just walked into a coin shop, asked what their buy price was, handed over my coins, and they handed me cash.
 

MRAll134

Kingfisher
Is it true that it's hard to sell "junk silver"? It's been over a decade since I've sold any, but IIRC I just walked into a coin shop, asked what their buy price was, handed over my coins, and they handed me cash.
I actually don't have any experience selling silver, so I should keep my trap shut on that. I was thinking of selling a few pieces on EBay. I will let you know how that goes, when I give it a shot.
 

Hypno

Crow
True about different people being into silver for different reasons, but I think what you're talking about is investing in numismatic value, which is very different from investing in the metal itself. Not that there's anything wrong with it, it's just a different game.

For what it's worth I like the look of old, circulated coins a lot more than modern bullion, but again, that's just a matter of taste.

Is it true that it's hard to sell "junk silver"? It's been over a decade since I've sold any, but IIRC I just walked into a coin shop, asked what their buy price was, handed over my coins, and they handed me cash.

Junk silver is very liquid. It is government minted, so it has a known purity, 90%. That works out to .715 troy ounces for each dollar of face value, dimes, quarters, halves 1964 and before. Silver dollars have .76 troy oz.

Its also comes in fractional weights - dimes, quarters, halves - and carries a very low premium. Low premium means more of your investment is in silver ounces rather than numismatics or collectibles. But yeah its typically circulated and doesn't have pretty pictuers on it.

If you look at coin dealers now, American Silver Eagles are going for about $13 over the price the metal, generica one ounce silver bullion about $5 over the metal price. Junk silver is going for $30.42 per dollar of face, which if you divide by .715 means you are effectively paying $42.50 per ounce. That is an historically huge premium for junk, often it sells without premium. With premia so high at this time, I would just buy PSLV.
 

aynrus

Kingfisher
One of the few opinions from reddit that isn't incoherent ramblings and well-written...
I find it interesting, though, that while the author talks negatively about contents of SLV prospectus (didn't find that exact language there), he forgets to mention the same kind of content in PSLV prospectus. (is that post written by Sprott himself?)

Global events outside the Trust’s control, such as the COVID-19 pandemic, may adversely affect the Trust’s business, financial condition and result of operations. The Trust cautions that current global uncertainty with respect to the spread of the coronavirus disease 2019 (COVID-19) and its effect on the broader global and local economy may have a significant negative effect on the Trust, such as decreasing the willingness of the general population to travel, causing staff shortages, market fluctuations in the price of silver, and increased government regulation, all of which may negatively impact the Trust’s business, financial condition and results of operations including the ability for the Trust to provide services, including but not limited to, the Trust’s ability to carry out unitholders’ redemption requests and its ability to deliver physical silver bullion, including increased delivery times and/or associated costs.

He lost me at that little intentional omission.
Anyway, there's another variable called: "Uncle Sam had ordered..."
Honest pump attempt and a good one....
 

Arado

Pelican
Gold Member
One of the few opinions from reddit that isn't incoherent ramblings and well-written...
I find it interesting, though, that while the author talks negatively about contents of SLV prospectus (didn't find that exact language there), he forgets to mention the same kind of content in PSLV prospectus. (is that post written by Sprott himself?)



He lost me at that little intentional omission.
Anyway, there's another variable called: "Uncle Sam had ordered..."
Honest pump attempt and a good one....
As quoted, the PSLV implies that due to COVID supply chain disruptions there may be delays, while the SLV prospectus change notes that they may not be able to get the silver at all. The entire reason PSLV exists is because of its link to the physical - Sprott is a metals focused company, while SLV is ishares Blackrock, the establishment.

Was there anything factually incorrect in the reddit post that causes you to call it a pump?
 

Hypno

Crow
Premiums on Physical silver. Another way to think about premiums is to think ahead to when you might sell. Compare having a 100 oz bar, which has the lowest premium, to 100 generic rounds, to 100 silver dollars.

There are few people who can afford a 100 oz bar at today's prices, let alone tomorrow's. Much easier to sell your stack one ounce at a time. Its also more expensive to buy silver dollars than generic silver rounds, but a lot people would rather have a government minted coin that is instantly recognizable, even if it is only .90% pure, than a random silver round minted by some ranom mint that might have a picture of Santa Claus on it, or footsteps, or a liberty bell or whatever.

Everyone has to chooose their own preference. I"ll just point out that in a few months these premiums are not going to be so high. So silver could go up and the value of your stack might go down. In the meantime, PSLV is a good alternative.

PSLV stores their silver in the vaults of the Royal Bank of Canada. Yes Sprott wrote the prospectus but the whole point of PSLV was that they had physical metal, not just futures contracts. When you buy PSLV, they create more shares and use the cash to buy more physical silver; when you buy SLV, they create more shares and buy a futures contract.

One thing to realize is that on any given day, futures contracts controlling more than 100 times the annual output of all silver mines are exchanged. On some level, there has to be a lot more paper than there is silver.

Also, with the recent short squeeze, SLV has amended its prospectus to say not only do they have futures instead of metal, but that due to market and system risks those futures contracts might not equal the return of holding the actual metal.
 
When people realize there isn't enough silver to cover, SLV will Crash like you haven't seen. They will have to go in and show proof of inventory. In this scenario you can imagine speculators will bet how much silver they actually have, or whether they will go belly up. I'd get out now.

Years ago Enron put expenses which should have been reducing net income onto their balance sheet, when people found out the assets weren't there it was a massive crash. "Overstatement of Assets" "No inventory" .

If you really do not want physical, then buy PSLV. At least they physically store the silver so you are actually buying silver (apparently). There are massive amounts of money switching out of SLV into PSLV.

The Second reason I'd tell you to get out is that if you own SLV you are part of the problem. You are essentially depending on other little people to do the squeeze, rather than take one little step and go to a local pawn store or order some online.

SLV is owned by JP Morgan. The investors buy the Silver, then Short the COMEX. Recently they got caught admitting that they took funds coming into their Silver ETF, and bought Silver Shorts on the COMEX? Your money is with the market manipulators. As long as you hold it, you are part of the problem.


I disagree...

SLV is owned by blackrock. JPM are custodians, which means they keep a trustworthy eye on the reserves to make sure everything's legit.

There's a big difference between Enron shares (in a company that lied about it's value) and shares in SLV (which give you a non-retrievable share in non-existent silver... but that must be settled for equal value).

So if the price of silver rises (hard to see how that won't happen), blackrock have to give you equal $$$ when you sell.

A default on that obligation could happen, if the institution behind the fund folded.

Not saying that couldn't happen, but we're talking about Blackrock... with assets of $161bn.

I'm not going to start crying when it comes to light that I can't get any physical. But I'm gonna start selling when the price hits $100.

As for being part of the problem, please.

I don't think anyone gives a [earmuffs] about my drop in the ocean.

Anyway, even that's misguided.

There are something like 8 banks short SLV... and they're gonna get crushed if the price rises significantly.

However JPM are out. The word is when they slapped the market down in March, they covered their shorts, and are now sitting on a massive vault of physical.

No-one on the planet will do better than them when the price is finally released (surprise, surprise).

[I have however sold my shares in SLV, which was a mistake, but as a buying opportunity looks likely next week, hopefully everything'll work out.]
 
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NoMoreTO

Ostrich
Here is a recent post from wallstreetbets about the silver squeeze:



^^^ Excellent Read. Some excepts below.

Hoping this big boys start to feel the pinch and take physical delivery.

The final day to roll contracts forward to not be eligible for March delivery is Wednesday, February 24th
If you want to think about it like a stock, the short interest is 573% of the 'float'. This is based on the fact that over the next 3 months there are futures contracts and options which have the right to take delivery of 847 million ounces of silver. This is compared to only 147 million ounces registered on the COMEX that could fulfil these deliveries. For perspective, GME short interest peaked at around 140% of its float, and that was considered crazy high.

March is gearing up to potentially be an earth shattering month for delivery requests that could send silver soaring. March in the previous 3 years has averaged 26.79 million ounces delivered. If this year's month of March experienced the same 422% increase in deliveries that occurred in February, that would represent ~140 million ounces delivered. Enough to completely drain the COMEX registered stocks.

But why would contract holders all of a sudden start to demand delivery when cash settlement has historically been the norm? A couple of reasons.

The first reason is arbitrage. Premiums on 1000oz bars have surged to somewhere between $1 and $2 an ounce (this is unheard of on the 1000oz commercial bars), meaning that traders can stand for delivery and then sell in the physical market for immediate profit. When supply had become constrained in previous silver bull markets these premiums were more like 30 cents an ounce.

In addition, mints are also interested in arbitrage. They could begin to take delivery to break down 1000oz commercial bars into smaller units which currently trade at historic premiums of $5-$8 an ounce. The small unit silver market has experienced greater demand than ever before. The entire stock of small unit silver was sold out at all dealers a few weeks ago. The small amounts they do get in stock are only sold at massive premiums.

So why did JPM feel the need to downgrade silver just as it started to spike, why did the CFTC feel the need to raise margin requirements the very same day, and why did Goldman feel the need to publish an article saying the squeeze was impossible, also on the same day? They are terrified the squeeze of the naked shorts in the silver market might actually happen. Just as the ETFs are now warning in their prospectuses.

He told me an anecdote from back in the previous run-up during 2010-11 where he had a conversation with Eric Sprott who mentioned that Sprott Inc's purchase of just 22 million commercial ounces to start their ETF of PSLV was enough to drive up the price by over $2 an ounce. Unlike the other silver ETFs which just allocate silver off of the LBMA, PSLV actually sources silver in the open market to add to their vaults,

Originally both gold and silver were considered legal tender in the United States.

The monetary base was roughly half comprised of gold and half comprised of silver, with a fixed exchange rate of 15 ounces of silver to one ounce of gold. Because silver was more common, it was considered the common currency of exchange with gold only being used by the wealthy in large transactions.

In 1873 a bill was signed to demonetize silver, while keeping gold as legal tender.

All of the common people had their savings in silver which became increasingly worth less relative to gold, while all of the wealthy had their savings in gold, so the value of their savings appreciated.

In line with the removal of 50% of the monetary base, we experienced roughly 50% deflation over the next few decades.

To get the most secure, best value for your dollar in terms of silver I would personally prioritize purchases in the following order (others may prioritize differently and that's ok):

  1. Take delivery on the futures market if you are able (no premiums, but only available to large players)
  2. Purchase shares of the PSLV ETF who will then purchase 1000oz bars
  3. Purchase 1000oz bars at retail if you can find them for reasonable premiums
  4. Purchase smaller units of silver if the premiums come down to 15% or less. There are roughly 1-2 billion ounces of small unit silver in the world that don't directly impact the 1000oz bar market, but demand for them does cause premiums to soar, which can then cause mints to purchase 1000oz bars to smelt into smaller pieces. This is also the preferred option for those who are concerned with the total collapse of the fiat monetary system and other doomsday scenarios. Personally I'm just wanting honest markets and to make tendies which is why this ranks 4th on my list.
  5. Purchase other silver ETFs such as SLV. Purchasing these will at least theoretically take silver off of the LBMA, but recent disclosures from these ETFs are making them seem less trustworthy (note that there is no definitive proof of any kind of fraud from these ETFs)
  6. Riskier Alternatives: Purchasing shares of silver miners, calls on silver miners, and even calls on the other silver ETFs are all riskier bets and potentially more profitable short term. This is likely what many here at WSB are going to do
 

Hypno

Crow
Do you guys have any recommendations for silver/gold miner stocks that are up and coming, with a current price of less than 5$ a share? I recently got some DSV.VN (discovery metals) shares and the gains have been pretty good. Anything else like it? I got my eye on harmony gold stocks, not sure if I want to dive into gold stuff yet though.

GDXJ is an ETF and is plenty speculative.
 

Hypno

Crow
Yes, someone is shorting silver. This has the effect of depressing the price.

The difference between GMA and SLV is this time its not some hedge fund on the other side of the trade. Its JPM and other primary dealers on behalf of U.S. Treasury via The Exchange Stabilization Fund. In other words, its the "house," and the house never loses, not in the long run. Ask the Hunt brothers.

If you want to benefit from silver being undervalued, buy PSLV or physical metal.
 

MRAll134

Kingfisher
The price of silver is not moving as always. 6 month chart:

 

NoMoreTO

Ostrich
The price of silver is not moving as always. 6 month chart:


Sure. Just like the stock chart behind every investment advisor showing growth, since 2010. Or since after the dot com bubble.

1 year chart tells a different story.
 

MRAll134

Kingfisher
Sure. Just like the stock chart behind every investment advisor showing growth, since 2010. Or since after the dot com bubble.

1 year chart tells a different story.
Yep, the 1 year chart looks a lot better. I thought there was some sort of "silver squeeze" going on?

I will just keep picking up numismatic pieces. Also, make sure you double-check everything online retailers send you. I just had one send me 1 coin when I ordered 2. They are rectifying. But, things can go wrong - obviously.
 
Do you guys have any recommendations for silver/gold miner stocks that are up and coming, with a current price of less than 5$ a share? I recently got some DSV.VN (discovery metals) shares and the gains have been pretty good. Anything else like it? I got my eye on harmony gold stocks, not sure if I want to dive into gold stuff yet though.
I think Bayhorse is pretty undervalued and is just starting to run up after being talked about on 4chan, Blue Lagoon and Dolly Varden are two other junior miners with potential.
 
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