Silver’s Gamestop Moment?
Posted August 04, 2022
The year was 1922.
By all accounts, Clarence Saunders was set for life.
He had what many call “F U money.”
The type of money that allowed him to begin building his dream home in Memphis, Tennessee -- a pink marble mansion.
Saunders minted his fortune by revolutionizing the grocery store industry with his Piggly Wigglies, the first self-service shops in America.
In Feb. 1922, Saunders listed Piggly Wiggly shares on the New York Stock Exchange.
In 1923, however, Merrill Lynch and other Wall Street speculators attempted a bear raid on the stock, predicting the price would fall.
Wanting to teach them a lesson, and add to his fortune, Saunders took out a loan of $10 million and shot back, buying up 98% of the shares in circulation, driving the price from $39 to $124.
The bear raiders were hit. Hard.
But, in the end, Saunders’ risky escapade blew up in his face. Due to a trading halt and delivery extensions, Saunders defaulted on his debts, and was forced into bankruptcy.
His pink mansion became Memphis’ first-ever museum.
In 1862, similarly, Cornelius Vanderbilt pushed back against a bear raid on Harlem Railroad. But he had better luck than Saunders. By the end of it, Vanderbilt bankrupted a town and gained control of the only two railroads offering service to Manhattan.
The Mother of all Short Squeezes
Short squeezes are nothing new.
But none were quite as dramatic as Gamestop, what some are calling “the mother of all short squeezes.”
The Gamestop idea started as a “potential investment opportunity,” but quickly transformed into an ideological movement to clap back at corrupt Wall Street bigwigs.
It caused no shortage of chaos in the markets.
In a matter of nine trading days, the stock shot up from about $20 to $400.
Some traders raked in 40,000%+ returns. Meanwhile, prominent financial institutions were pulling their hair out.
But, perhaps this saga is only just beginning…
Many believe an even bigger “WallStreetBets”-style short squeeze is coming fast.
In fact, according to about 200,000 “silverbacks”... we ain’t seen nothing yet.
The Silver Squeeze?
It began with the following post, in the midst of the Gamestop chaos:
The post went viral, clocking in millions of hits. But then, for reasons unknown, the moderators of WallStreetBets removed it.
That’s when a few members created their own subreddit, called WallStreetSilver (WSS), devoted entirely to investing in physical silver.
The group’s main goals are to A.] spread the gospel of silver as a superior investment class and B.] corner the silver market and crush the banks.
Their investment thesis is simple.
1.] Demand is up. According to the Silver Institute, global silver demand is forecast to hit a record high in 2022, driven by record industrial and investment demand.
2.] Supply is down. It’s a major theme in the WSS crowd that the world is only years away from running out of silver.
3.] The price is artificially suppressed due to the paper silver market. (Estimates in WSS suggest there are at least 200 “paper ounces” for every physical ounce of silver.)
Much of the silver that banks buy and sell is borrowed, says WSS.
It’s all a shell game.
4.] The banks are lying about how much silver they have. And if the price of silver goes high enough, it will bankrupt the banksters.
As one user put it, “The banks being able to stop the price of silver going up, especially with the inflation horror show, is as likely as a fly stopping a semi truck. Banks are short (contracted to sell) multiple ounces for every ounce that is in their warehouses.”
In case you’re looking to dive deeper…
Chris Marcus, a folk hero in WSS, wrote a book, called The Big Silver Short, all about “the short squeeze of a lifetime.”
To be sure, WSS isn’t trying anything new. This isn’t the first time a silver squeeze has been tried in this fashion.
It’s not even the second time.
The Hunt Brothers tried it and failed.
Max Keiser tried it and failed.
(More on those efforts tomorrow.)
But the WSS crowd believes that this time will be different.
Three things are at play.
ONE: JP Morgan executives are currently under trial for manipulating the prices of precious metals.
TWO: A mysterious Texan billionaire just scooped up $50 million worth of silver, with the stated intention of buying $1 billion. This, they say, is a sign that big money is waking up.
THREE: Silver is one of the most undervalued metals on Earth right now, presenting massive upside potential.
More on those three points — and the full case for a silver squeeze — tomorrow.