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 Replies: 63 / Views: 9,302 |
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Pillar of the Community
 United States
5189 Posts |
Unless WallstreetBets demands delivery of all the "silver" they are buying, nothing will change.
As of now, they are mostly buying paper contracts. COMEX and JPM have no problem creating paper contracts out of thin air, as long as the fine-print says they don't have to deliver physical (in case of force majeur) and can settle for paper dollars.
The ONLY way the paper game ends is if all producers REFUSE to deliver silver to the COMEX. Then and only then will it be "game over".
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Pillar of the Community
United States
4333 Posts |
They can settle in cash?
When I listen to LED ZEPPELIN...so do my neighbors...
Roll hunting since '77
Dirt fishing since '72
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Pillar of the Community
United States
3343 Posts |
For one example, GLD (SPDR Gold Shares) trades in cash. Each share has a value of .0939995 troy ounces, and at current gold price that's about the correct value. It's a fair question whether it is actually an index fund. Their assets are stated as 36.5 million troy ounces. But according to Forbes (11/15/2011), only Authorized Participants can actually receive any gold: Regular shareholders have no rights of redemption and the gold is not required to be insured by the Trust, which is not liable for loss, damage, theft, nor fraud. Shares are bought in the open market, only after Authorized Participants decide to place or sell them. Therefore a retail investor doesn't actually "own" gold, but an asset that is backed by gold and represents a certain quantity of the yellow metal.https://www.forbes.com/sites/afonte...11ec82457c22I suppose their view of things is that when you redeem your shares you can go to APMEX and buy physical gold. They have given you a gold-like return on your money for the time that you own their shares. But unless you're JP Morgan you'll never get any gold from them. They are holding gold, but they are not holding it for you. It's a shame, because bullion supply is tight and sells at a premium of ca 20% today. You could save a lot of money by selling and tapping into their underlying gold reserve at cost. "Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
02/01/2021 7:30 pm
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Pillar of the Community
United States
5189 Posts |
The "problem" of course is that, yes, you can sell GLD shares and use to proceeds to buy bullion, but most likely there will be a "premium" for bullion. So you will always be "running behind".
And what are you gonna do if the "premium" keeps growing?
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Pillar of the Community
United States
3343 Posts |
I just noted that today NumisEd. APMEX is out of low grade US gold eagles, leaving MS61 & 62 coins as the entry point at 25% over bullion. The premium grows by forcing bullion buyers into numismatic grades. If GLD is really holding 36.5 million ounces, why can't they satisfy the physical market for their shareholders? "Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
02/01/2021 7:38 pm
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Pillar of the Community
United States
5189 Posts |
Edited by NumisEd
02/01/2021 7:42 pm
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Pillar of the Community
United States
1590 Posts |
Effectively this would destroy the coin hobby; were spot to hit $1000/oz. Not that I think it would go anywhere near that.
For one thing electronics would become unsaleable just to cover the cost of the silver in each unit.
As for coins; If silver hit that "magic" $1000/oz then Morgans would be about $800 each with a just a small premium. Common 1964 dimes would be selling at about $80 each. Forget numismatic value. In the last great silver run numismatic value, except for the absolute keys went through out the door.
If you have $800 to spend, do you buy a Morgan that you know is probably going to go down like the Titanic at some point, or do you buy an 09VDB-S? 1913-S type II Buff? How about going into Large cents? Of course this will cause all these prices to rise to a level that casual collectors will be squeezed out of.
In sum if you are out to get rich...this might work, but the likelyhood of every reaching these levels is unlikely.
If these levels are reached it will tank the economy and the resultant inflation would wipe away your gains.
And; it will adversely effect the hobby.
At my shop we are still buying but once it hits...probably 32, we are out. We fully expect it to plunge hard once a certain goal has been met. I'm not even convinced that this reddit group is not being snookered into making money for the big boys.
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Pillar of the Community
United States
8938 Posts |
Okay I'm surprised nobody has said it so I will. It's impossible to short squeeze a physical metal. The way that the $GME play is working is that they're buying every single share possible so that there are no shares for the hedge funds to buy. If you wanted to short silver you'd have to replicate the same with physical silver which is impossible.
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Pillar of the Community
United States
3343 Posts |
Aside from the bullion on APMEX, I looked over the usual sources for metal scrap on the bay. My usual go-to of underpriced sterling flatware, kitschy nut trays and candy bowls has disappeared. As with coins, all the high-end merchandise is still available. "Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
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Pillar of the Community
Australia
1333 Posts |
I don't know where this Purchase SLV rumour came from but from what I remember it was made maybe on thursday last week. I have been watching this whole situation closely cause I realise this is a truely a good opportunity to make some nice money, for what is mostly a hobby for the most of us collectors. Warning to most of us here don't get swept up in the craze you don't make money by buying at the top and selling at the bottom. The Reddit may seem like ordinary people making share purchase, that is incorrect they know their stuff especially those whom moved first. This was a very technical short squeeze of "GME", some understood that the short side was held in part to a hedge fund call Melvin capital (later got an liquidity injection from Citadel Capital (market maker and a investment company)) , however the majority of the other side was held by Scion Asset management. Citadel is net long SLV and the Reddit already know this as this is to them distraction or at least some of them already know this. Citadel Capital might be trying to pump up their other assets so that they can run and cover their other losses (reasonable as American Airlines a company that citadel is also long went up with no reason when GME went down) Felt I need to say this even tho I have an interest to see silver Rocket to the moon, it help to be ground and realistic about anything in life least to get sucker in and are force to become the bag holder.  $100 USD an 1OZ    |
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Pillar of the Community
Australia
1333 Posts |
@GrapeCollects partial correct, however we know it can't happen exactly to the same extend that GME squeeze happened I think central banks might come in to the picture. Doesn't mean not want someone to try :D Hunt bro's
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Pillar of the Community
Australia
1333 Posts |
@fistfulladirt I believe some can cash settle however that's not all of them that's why some larger clients are redeeming the physical on some exchanges haaha (they are pull metal off the exchanges but are being restricted in term of volume and timing)
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Pillar of the Community
United States
1590 Posts |
I'm not sure everyone understands that these contracts are leveraged to a ridiculas degree. It is a physical impossibility to cash all these contracts in. Someone here probably knows, but years ago it was, I believe, 1/1000 an oz per paper ounce?
In other words when a company issue a contract for 10000 ounces, they don't actually buy 10,000 ounces to cover it.
If people know exactly how the futures market worked they would probably get the pitchforks out! ( pun intended)
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Pillar of the Community
United States
4333 Posts |
Phew! Back into the $27 mark. I'd prefer not to see even $100 silver. A slow gradual climb long term for my goals.
When I listen to LED ZEPPELIN...so do my neighbors...
Roll hunting since '77
Dirt fishing since '72
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Pillar of the Community
United States
2637 Posts |
Quote:
Unless WallstreetBets demands delivery of all the "silver" they are buying, nothing will change. Massive entry into PSLV, which is not just paper contracts backed by smoke and mirrors. |
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Replies: 63 / Views: 9,302 |
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Posted 02/01/2021 5:22 pm
