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David Fickling: Silver won't fall so easily to the memelords' assault

Section: Daily Dispatches

By David Fickling
Bloomberg News
Monday, February 1, 2021

If the guiding spirit of financial markets in 2021 is "you only live once," you ought to discount the odds of lightning striking in the same place twice.

That suggests the retail investors who drove silver up as much as 7.5% late Sunday may have a harder time achieving anything like the gains they've notched in stock of GameStop Corp., which is up 1,625% so far this year thanks to an epic short squeeze.

... Dispatch continues below ...


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One reason for this is simply that short selling is a far more normal element of futures markets, as my Bloomberg News colleague Eddie van der Walt has argued. Still, that didn't stop a notorious episode in 1979, when buccaneering Texan and Arab oilmen managed to cause a fivefold increase in the price of silver in a matter of months. ...

Next it's worth considering how much silver is already stored away under lock and key. Thanks to the rise of financial products tied to commodities over the past decade, this is now a huge pile of metal -- some 2.46 billion ounces, of which about 96% is investment-linked product. Only about 7.2% of that mountain is needed each year to meet the demand that's not being supplied by miners.

As a result, there's ample metal on hand in the world's bank vaults that can be sold into any periodic price strength. ...

... For the remainder of the commentary:

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