The Silver Trade

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My Case for Silver, and why the WSB debacle doesn’t matter.

I have been a WSB user, and contributer, long before the recent 7 million newbs joined. Newsflash, I also like the SLV trade!

Here we go, lets dig into this whole stupid mess of the Silver Squeeze, Silver Trade, or whatever else you want to call it. Below I will lay out what I think happened with Wall Street Bets (WSB) and why it doesn’t matter for my SLV trade and bull case.

In case you have been living in a cave without internet access for the past week, Reddit and WSB, have been in the news nonstop, almost hourly. Mostly around the amazing Game Stop short squeeze they pulled off. However, that has spilled into the media speculating on what other trades the WSB crew might get into.

A lot of that media speculation was not totally wrong. Some of it was. Mostly is was all sensationalized for views and clicks. They latched onto any social media posts on WSB. Some news intern probably came across the Silver post and ran with it. Once one channel reported that WSB was getting into the Silver game it went viral. It also was making the twitter rounds. I am not quite sure if these random media interns grabbed the story from WSB or from Twitter talk.

However, it soon became a yelling match between the Media and WSB. It was a battle if they were indeed a part of the Silver Squeeze.

I first saw the Silver posts on one of the news channels, either Bloomberg or CNBC. While I have been a part of WSB in the past, I don’t visit it or post as much as I did last Summer. I was excited to see that WSB was getting behind Silver. Though I had a few doubts and questions. So I jumped on WSB to see what I could find.

After looking around, I found very few Silver posts. However, I did find some Silver posts. Some of them had traction, comments, and one had 15k upvotes.

I have been long SLV, buying into the SLV ETF since around $15 area. I have OTM call options. As I wrote here in my 2021 outlook, I expected Gold, Silver, and Oil to all have a good year.

I also am someone who uses and posts on WSB. So I thought it was great that Silver was getting some attention and traction, even if only from a small group.

That was Thursday I think, or Friday. By the weekend there was a lot more talk of Silver, and #SilverSqueeze was trending on Twitter. Then WSB started to push back. They downvoted or removed most of the Silver posts. I tried to post a few things myself and my posts did not go through. The hive mind of the GME crowd was yelling and screaming about Silver. How nobody there was in the trade. Mostly they posted all sorts of conspiracy theories about who was behind this news and Silver trade.

By Monday, Silver popped nicely. However, GME was down. WSB wanted blood and went after Silver hard. Blaming the media and silver for all their problems and continuing the relentless attack on the trade everywhere they could. On WSB, Yahoo, Twitter, and other places I found people yelling and screaming not to buy SLV or Silver, and how it was all a scam. Some in the media now took these posts as gospel and reported that WSB was against the trade.

What is comical here is that many of these posts and comments on the WSB Reddit are from account under 6 months, some being less than a month old. Some accounts are older, but the posters just joined WSB. Sure some of them had been around longer, but the majority were recent WSB accounts and also I would guess, the last into the GME trade. They are what we call, the bag holders.

The few people trying to post other trades, Silver or otherwise, were downvoted into oblivion. Basically all you will find on WSB right now is GME posts. WSB used to have all sorts of posts and ideas. Also there was some good DD posts on there that would give you trading ideas. At one point they even had Gold and Silver bugs on WSB.

What is ironic in all of this is that if WSB newb crowd went with the Silver trade, instead of bashing it, the price would probably still be going up sharply. They could have taken their GME gains and moved into Silver and made even more money. They love options and SLV has them.

This is what a mature investor, or trader with a half brain, would be doing after that great run up that they had.

Unfortunately, you have a lot of young people on there who just opened a robinhood account, and have no idea how things work. They actually believed that it was just about getting the man, or sticking it to hedge funds. Forgetting that WSB has ALWAYS been about making money. Sure there is sometimes altruistic reasons for a trade, and the little guy vs the big guy talk. There also used to be lots of talk about how we are all screwed and in debt and how it will collapse. But mostly it is about trading crazy options and making big gainz.

So to pretend that the GME trade was not going to end, or that the smarter positions were not going to take their gains at some point, was foolish.

So WSB just attacked Silver and some other trades on there. They kept yelling about GME, instead of considering anything else. What they did manage to do was get a pullback on the Silver trade on Tuesday. Silver sunk along with Game Stop. So they managed to miss the momentum on a new trade, lose money on GME, and also silence many of the other people on WSB.

It sort of reminded me of how people silence political sides or opinions they don’t agree with now. It is the cancel culture run amok. Now you can’t even post a stock idea unless the loud mouths want to be in it. The state of technology, especially social media, is a mess. The very network that brought about this amazing game stop trade, that has been discussed for months there, also managed to silence and kill off all the other good ideas. At least for the moment they have.

Why I like the SLV Trade

Now that I have given some context from my own personal view of the whole GME Silver trade debacle. Let me go into why I like the SLV trade.

Silver is trailing all the other metals. While Gold was hitting all time highs last year, Silver didn’t even come close to its 2011 high of $48. Silver has been undervalued for a long time. My view is eventually these types of undervalued things rise back up.

There are multiple traders and macro view types who think Silver is also due to rise. One reason is the unlimited Fed printing and possible inflation that we will start to see.

Another reason, is that Silver, unlike Gold, actually has many uses. So demand will keep rising.

Josh Brown, posted about the Silver trade. While he claimed on CNBC on Tuesday that it was not driven by WSB, the post itself mentions the WSB crowd. But he claims that he is still in the trade and likes Silver. He is in the SLV ETF and well as some silver miner stocks.

Goldman Sachs likes Silver, with or without the WSB or #SilverSquueze crowd. They have a $33 target price on Silver. Mostly based on boosted solar spending.

My view on Silver, even before all of this is that it was priced too low. I looked at the charts and figured that $35 should be in play by the Summer. I purchased April options. Some $35 OTM Calls that I am still holding.

I also don’t see why we can’t hit the $48 highs again. All the other metals are on a tear. People are buying up Silver, and it has lots of other uses and demand. My best case price for Silver right now as I write this is $45 in 2021. Of course, that is with all things being perfect. But I don’t think it is impossible to get to that level.

I also like physical silver but as more of a hobby. Some people think that physical silver is the way to go though.

To be clear, I think the WSB is a good Reddit. It is amazing what they managed to do, and I wish the GME traders luck.

As always, this is not professional advice. Do your own research, don’t do anything just based off of my ideas and thoughts.