In this file photo dated Wednesday, May 9, 2007, Silver bullion, bars weighing five kilograms each, are displayed in the trading room of the stock exchange in Frankfurt, Germany. Silver futures jumped more than 10% on Monday Feb. 1, 2021, following strong gains over the weekend. (AP Photo/Michael Probst, FILE)
The erratic trading in shares of underdog companies like GameStop that turned markets combustible last week appears to have migrated to commodities, sending silver prices surging to an eight-year high.
Silver futures jumped more than 9% on Monday to $29.42 per ounce with #silversqueeze trending on Twitter. That exuberance spread to companies that mine precious metals, especially silver. Shares of Pan American Silver surged more than 9%, First Majestic Silver rose 18.7%, Hecla Mining spiked 21.8%, and Coeur Mining soared 17.6%.
Some analysts called price jump the latest assault by the smaller investors who sent GameStop soaring recently. But many of those same traders instead called it a trap set by hedge funds to divert their attention away from GameStop, as the saga captivating Wall Street gets even more dramatic.
An online army of Reddit traders banded together for the past week to snap up thousands of shares of GameStop, AMC and other struggling chains, stocks that have been heavily shorted (bets that the stock will fall) by a number of hedge funds. In the process, they've done heavy damage to those hedge funds in a stunning reversal of financial power on Wall Street.
Some of these smaller traders believe the hedge funds that were pillaged last week are behind the surge in silver. Communications on messaging boards claim hedge funds have now become active on Reddit anonymously, attempting to drive them out of GameStop bets and into silver, but only after hedge funds had taken huge positions.
“IT’S A TRAP!” one Redditor warned, though no one really seemed certain.
Meanwhile, GameStop shares dropped 28% to $233 but the stock price has been tremendously volatile of late. Last week a 44% drop on Thursday was followed by a 68% jump Friday.
The number of GameStop shares that have been shorted (bets that the stock will fall), were slashed by more than half in recent days, according to a report Monday by the analytics firm S3 Partners.
Last week’s turmoil caused hedge funds to pull back on their investments by the sharpest degree since February 2009, during the market collapse caused by the financial crisis, according to Goldman Sachs, which provides services such as clearing and consulting to hedge funds.
Goldman says hedge funds have have been getting out of both short sales, where they’re betting a stock will fall, and more traditional investments that bank on rising prices “in every sector,” according to a Goldman Sachs report Monday.
Even so, hedge funds' exposure to the stock market remains close to record levels. That means there’s still risk for more sell-offs by hedge funds.
The narrative has burst from financial pages, reaching even the White House, where President Joe Biden and Treasury Secretary Janet Yellen were peppered with questions about it last week.
On Monday, White House press secretary Jen Psaki was asked about GameStop and said that the incident/market volatility raises “an important set of policy issues.”
“We think congressional attention to these issues is appropriate,” Psaki adds.
The story has also moved out of Reddit chatrooms and into places where silver actually trades hands. Coin dealers are being overwhelmed by orders Monday.
The Silver Mountain, a Netherlands-based bullion dealer, said on its website that, “Due to extreme market volatility we cannot accept any new orders at this moment,” adding it hoped to reopen by the afternoon.
____
Jonathan Lemire contributed to this story from Washington.
Updated on February 1, 2021, at 3:42 p.m. ET with the latest details.
As the electric vehicle sector continues to heat up, one company could be poised to knock Tesla from its top spot. Many analysts have issued buy ratings and raised their price targets for EV-maker Rivian, and say that the company's push into under-developed areas like electric SUVs, pickups, and delivery trucks could give it the right competitive edge to push Tesla from the number one spot. Dan Ives, Managing Director of Equity Research at Wedbush Securities, joins Cheddar News' Closing Bell to discuss Rivian's potential market domination, why their business plan sets them up for success, and more.
Cheddar's Chloe Aiello joined "Closing Bell" to break down the progress of the SAFE Banking Act in Congress as cannabis businesses operators struggle to find financial institutions that will service them. Banks face steep federal penalties, including the risk of losing a bank charter, if found to be servicing marijuana businesses even if their state has legalized operations. Aiello reported that while there was some bipartisan support for the measure in the Senate, the bill faces some opposition from conservatives with "longstanding concerns" about cannabis and progressives who prefer a more comprehensive approach to reform.
Not everything is as it seems in the supermarket. From name brands under different labels, to confusing store layouts, supermarkets employ a variety of tactics to keep you spending. Including selling products with surprising ingredients. This episode of Who Knew? unveils the secrets of our supermarkets.
The world is amidst a skyscraper boom. In 2018, 146 buildings over 650 feet were constructed. That’s more than the total amount of skyscrapers constructed between 1979 and 1999. And all this construction is transforming our cities.
Amazon and online shopping have forever changed how we shop. While I love that I can order almost anything I need with the click of the mouse, this transition from in- person retail is shuttering MUCH of the brick and mortar landscape. But in what’s been deemed the “retail apocalypse” some brick and mortar stores are actually thriving.
From talking animals, to celebrity endorsements, to commercials that pull at your heart strings, agencies are always looking for new ways to connect with you. So it’s no surprise that trends come and go. But what might surprise you is how quickly trends change. In fact, most changes can be pinpointed to a single moment.
Over the decades American pastimes have come and gone. From the soda fountain, to carhop diners, to roller rinks. These former staples of American life have slowly faded into the void. And today, it looks like the time has come for a few other beloved businesses.
The streaming wars could be peaking as platforms vie for a shrinking pool of new subscribers and services like Disney+ recalibrate their outlooks as the rate of new memberships slows. Jana Arbanas, the U.S. telecom, media, and technology sector leader at Deloitte, joined Cheddar to discuss the 2022 outlook for streaming platforms, expecting more than 150 million people to cancel subscriptions adding to the global churn trend. "People are signing up for a service for a very specific piece of original, compelling content, watching that, perhaps, season of content, dropping that service, and then re-upping the service again when the next season comes out," Arbanas noted.
Chris Woodfolk, Corporate Citizenship Partner, LendingTree, joins Cheddar News to discuss how charitable giving is making a comeback from the pandemic and tips to donate on a budget.
TikTok isn't just for remixing the best trending sounds. The social media platform is having a positive impact on animal shelters and helping pets find forever homes, according to Katie Grissum, the communications and design coordinator for the non-profit animal shelter charity KC Pet Project. Grissum joined Cheddar to break down just how TikTok is being used to raise money and draw more eyes to animals in need of adoption.
