Is Silver “Next”? Plus an Update on Short Interest and Options Flow in GameStop

Published on
February 1st, 2021
Duration
42 minutes

The GameStop Gamma Wall Breaks Down as Virus Variants Ring Alarm Bells


Is Silver “Next”? Plus an Update on Short Interest and Options Flow in GameStop

Daily Briefing ·
Featuring Haley Draznin, Jack Farley, and Ed Harrison

Published on: February 1st, 2021 • Duration: 42 minutes

Real Vision’s Haley Draznin explores how the Reddit mania is spreading from Gamestop to the precious metals market like silver and even SPACs. In the main segment, Real Vision managing editor Ed Harrison conducts a data-filled deep dive of the ongoing pressures in GameStop Corp ($GME), looking at factors such as the declining short interest to renewed activity in far out-of-the-money call options. Ed rejects the theory that silver will be the next hotspot of speculative activity and notes that natural gas was actually up more than silver today. Lastly, Ed and Jack discuss potential endgame scenarios for the speculative mania in distressed equities like GameStop, and Ed shares an update on COVID-19 variants.

Comments

Transcript

  • DB
    Derek B.
    2 February 2021 @ 01:23
    Please go on WallStreetBets and check. WSB wants nothing to do with silver. Disappointing that you didn't verify. Very weak.
    • EH
      Edward H. | Real Vision
      2 February 2021 @ 01:44
      I thought we said that. There were some isolated comments on silver. But moderators deleted those. It is not something being pushed by WallStreetBets
    • EH
      Edward H. | Real Vision
      2 February 2021 @ 01:51
      Just went through the video and I see the reference you’re referring to in the intro. I understand now. My understanding of the situation is the same as yours here. WSB was not pushing silver.
    • JD
      John D.
      2 February 2021 @ 02:10
      ED...maybe the issue is that the tone from the begging half of the video seemed to support / verify what the mass media narrative has been (which can be right or wrong), but if we watch all the way through we see that you are questioning / possibly implying the opposite. Am I making sense? Is that right?
    • SS
      Steven S.
      2 February 2021 @ 02:17
      Ed made that clear in the video (WSB not pushing Ag). However, from the data I've seen, I think retail did account for 50-60% of the move in Ag over the past two trading days. It has been a complicated dynamic, though. Bars reacted, albeit mildly, to excessive coin demand, physical dealers shut down product due to lack of hedging, the paper market had massive inflows from online brokerages, and there was some short covering and call purchasing.
    • SS
      Steven S.
      2 February 2021 @ 02:19
      For example, this was sent out this morning (not something you see every day): APMEX Statement On Current Market Conditions: In the last week, we have seen a dramatic shift in Silver demand from our customers. For example, the ratio of ounces sold per day was running about two times earlier in the week and closer to four times the average demand by the end of the week. Once markets closed on Friday, we saw demand hit as much as six times a typical business day and more than 12 times a normal weekend day. Combined with the extremely high demand levels, we are also seeing a surge in new customers. On Saturday alone, we added as many new customers as we usually add in a week. Any Precious Metal dealer will take a long position in the futures market to protect against spot price exposure when the markets open. We do this because it is our goal not to take a speculative position on metal. The weekends are unique as we are not able to real-time hedge our position. We took an aggressive position this weekend, but clearly could not have predicted the volumes that were seen. We have partnerships around to world that allowed us to cover these long positions, but only to a point. Once we exceeded our comfort levels, we had little choice but to stop the sale of Silver on our website. This was a difficult decision to make and unprecedented in our history. As we evaluate the markets, it is difficult to know where Silver's price and demand will go in the coming day and weeks. APMEX is highly capitalized and has more than $150 million in inventory to support demand. We have made strategic decisions to procure additional metal, locking up any metal we can find in the market place. We suspect premiums will rise and rise quickly, as we are seeing significant increases in our costs, when we can even locate the metal. It is also highly likely that we will need an additional day or two to fill orders based on current order counts. The one guarantee we can make to our customers is that you will only be sold metal that is on-site, or we have procured the metal with a firm commitment date from our partners. In markets like this, we feel this is the best approach a retailer can take, as no one can predict product availability. We want to thank our customers for their patience and understanding during these turbulent times. APMEX prides itself on best in class service and delivering on promises to our customers. Sincerely, Ken Lewis CEO, APMEX
    • NM
      N M.
      2 February 2021 @ 03:41
      If the silver narrative isn't being pushed by WSB, who's pushing it?
    • JD
      John D.
      2 February 2021 @ 06:19
      Nicholas...I think they are saying that the media is possibly pushing that narrative for a reason...
    • NM
      N M.
      2 February 2021 @ 07:01
      So it’s not WSB creating or pushing the silver narrative, but the media are pushing it. What’s their motivation?
    • DG
      David G.
      2 February 2021 @ 07:54
      Technically it was being pushed by WSB. WSB claimed that it was bots(maybe it was Milton) that infiltrated WSB and pushed it under their umbrella; hence the deleted post. Based on that, it will not be clear who was duped Friday through the weekend, verses who was knowingly spreading false information on CNBC and else where. Nevertheless, Silver in the physical form was cleaned out due the infiltration, and supply and demand are always at play in the real world. A one once silver eagle is going for $40. I presume SLV has to buy some silver in an environment that is hard to get physical silver, and SLV will ultimately track the price of Silver. I don't know enough, to know it will play out, but, I bought deep ITM Sep. call and put options for regardless of whether this SLV goes to the MOON and back to Earth, or back to Earth and then the MOON. Very little time value in my contracts so I won't be hurt too badly no matter what happens.
    • BD
      Ben D.
      2 February 2021 @ 08:17
      The gold/silver ratio tells you that -given the increase in gold over the last year- Silver is technically relatively cheap and the market has been consolidating over the past months and was ready for a move. And silver investors/traders could have been inspired by the GME narrative - maybe that was an ignition. The silver retail market (billion, coins) has been very strong over the last days and other investors probably jumped on the trade (as many did with GME) by buying $SLV etc.
    • JF
      James F.
      2 February 2021 @ 10:48
      @Nicholas M. You could read this a few ways. 1) Perhaps it's not so much being 'pushed' by the media rather being (lazily) misattributed by them. All last week every stock that went up in a squeeze-like fashion was blamed on 'reddit users' or 'retail'. When it was just as likely to be hedge funds covering shorts, deleveraging, or going long to pile pain on one another. So silver could just be another example of that (it is a large market and difficult to move without size). Journalism isn't what it was. Or 2), The WSB theory, which can be deduced with less than 5mins browsing the sub, is that Citadel owns a large option position on silver. So they are behind it (many SLV posts are being attributed to bot accounts). Partly to distract the 'retail' from GME, and partly to pump their own position and (according to WSB) 'bail themselves out'. And, darkly, perhaps trying to lure retail to a market that has a history of manipulation by the big boys so they can get their money back. Or 3), The more conspiratorial WSB theory - media is pumping silver at the behest of the 'men behind the curtain' (the DTCCs, Citadels, JPMs etc). Or 4), the media are just doing their usual thing of taking things to extremes in order to make it seem more than it is and thus gaming people's attention to sell ads.
    • JD
      John D.
      2 February 2021 @ 12:15
      James F...thank you for this summary...correct me if I am wrong and I know that we need to formulate our own opinion but were ED and Jack suggesting it could have been option #3?
    • jb
      joseph b.
      2 February 2021 @ 14:08
      There are 2 silver markets. There is paper silver and there is physical silver. Try buying silver for the spot price. Better yet try finding physical silver to buy. The APMEX letter is not an isolated response by dealers
    • JA
      Jesse A.
      2 February 2021 @ 17:47
      Yeah I was going to write this comment and glad to see you beat me! Ed hinted that WSB was maybe not into silver but he didn't mention they are loudly claiming it's fake news. And that was after jack and haily had already towed the CNN/MSNBC line and confidently proclaimed that WSB had left GME for SLV.
    • JW
      Jason W.
      3 February 2021 @ 01:51
      Hi Ed, I am disappointed in the introduction and I am glad you admitted that the mass media false narrative of WSB attempting to squeeze the Silver market was an error. Nonetheless, Real Vision should just ensure that any content is independently curated and verified as well as strictly adherent to objective data and facts. Real Vision should stay away from replicating the "newsgrabbing" style headlines similar to those on CNBC and clickbait style YouTube Titles. As a paying member (Pro member here) I request that Real Vision cut the bloat. I didn't even watch the segment because was so turned off by the intro - my thinking is that there is likely more mis-information to follow. Thanks, Jason W.
  • an
    antti n.
    2 February 2021 @ 23:04
    no
  • BS
    Brian S.
    2 February 2021 @ 20:59
    Aha! Systemic risk mentioned. I asked Jack about this last week.
  • mb
    michael b.
    1 February 2021 @ 23:49
    Jack, I encourage you to spend some time at the WSB forum on Reddit. They are absolutely NOT trying to drive up Silver. They are on GameStop and GameStop alone. They even bought premium billboard space in times square pushing GME today. There’s a misinformation campaign going on (which the forum has clearly identified) to push the narrative that they have moved on from GameStop. That is absolutely not the case but the media has not done their homework or even spent a few minutes on the forum to confirm any of that. We need realvision to continue to be set apart from the main stream media and do the research that the MSM is too lazy or conflicted to do for themselves.
    • JF
      Jack F. | Real Vision
      1 February 2021 @ 23:52
      Hi Michael, I have actually spent a fair amount of time on r/WSB and would agree with your claim. They remain committed to the $GME job
    • MK
      Mike K.
      1 February 2021 @ 23:56
      You didn't listen past the first 5 minutes did you?
    • JF
      Joao F.
      1 February 2021 @ 23:56
      The media is not misinformed. The media is conducted to spread a particular message.
    • ns
      nikolay s.
      2 February 2021 @ 00:03
      Agree looks like hedgies want to eat our tendies but shilling silver
    • JD
      John D.
      2 February 2021 @ 00:22
      Glad you brought this up Michael...but I think things are happening in real time so quickly that they cannot be on it 100% of the time. Let's see if they listen to your feedback/concern and respond accordingly. There possibly is so much for us to unpack and understand from this one event that we have not been able to fully comprehended all the moving parts just yet.
    • JD
      John D.
      2 February 2021 @ 00:45
      wait...I should have watched all the way through before I commented. I think I need to watch this again to make sure I think I am understanding this right....
    • mb
      michael b.
      2 February 2021 @ 01:45
      Jack and Ed are excellent and I appreciate them both. Thanks, Jack, for replying. To clarify, there’s misinformation about a WSB switch to pumping silver rather than GME and there are more posts on WSB countering that then even promoting GME. The MSM is either complicit or lazy, whereas RV is not. This Daily Briefing would have benefited from being fully aware of and addressing that from the starting block. Was great nonetheless and I’m satisfied with Jack’s response. I wish everyone well.
    • JD
      John D.
      2 February 2021 @ 02:34
      great response michael b! I am not sure if the roll out of information was or wasn't intended to be like that?
    • SR
      Sam R.
      2 February 2021 @ 10:14
      Agreed, almost every thread on WSB is now about GME. Hard to find a positive word about silver. However, it's wrong to imply that there is a single 'They'. This is a rag tag retail trading community, not a crack military unit. There are tens of thousands of posters per day, and they don't all have the same aims. It's not clear how much power mods have to shape the narrative, and whether or not they are curating threads in pursuit of some grand strategy is not clear. Last Wednesday a thread was posted suggesting silver become a target. First Majestic Silver (AG) was also mentioned, citing high short interest. There were thousands of supportive comments, the usual silver-bug manipulation narratives were wheeled out, combined with some quite sophisticated discussion about ETF construction, futures delivery and so on. AG gapped up to new highs the following day. Other silver names up too. The story was picked up over the next few days by various news outlets. There was more discussion on WSB and the focus shifted towards targeting the ETF SLV. Being something of a silver bug's wet dream, the coin dealer community has picked up the ball and run with it. It's absolutely in their interest to promote events like this as 'game changers' and stoke panic buying of physical. My point is that WSB is now so widely read and watched by the media that any meme that starts there has the potential to go viral. Everyone is looking for 'the next Gamestop'. Perhaps, just like bitcoin is the next bitcoin, Gamestop is the next Gamestop. Perhaps not.
    • JA
      Jesse A.
      2 February 2021 @ 17:56
      Yeah this annoyed me too, maybe it'll be clarified on the next briefing...
  • JF
    Jess F.
    2 February 2021 @ 10:32
    As happens all too frequently I am having difficulty playing the video, however as it has not been mentioned in the comments, I have to surmise it was not mentioned in the video either. I am referring to the latest digging by WSB commenators, that there has been hugh failure to deliver of GME shares by those shorting. Some, it seems to me, very knowledgeable posters are all over this, not only failure to deliver but the various ruses to extend and hide this from the SEC, probably not difficult has they have a track record of ignoring abuses on Wall St., Even more disturbing some delve into the muddy waters of naked shorting and fake shares. There are so many abuses in the rotten world of our financial system it's little wonder that the exodus to crypto is snowballing. BTW I'll be very surprised if Ms Walters finds anything amiss in the latest Congressional hearings.
    • MN
      MYLENE N.
      2 February 2021 @ 16:53
      I sometimes have problems but it's usually when I'm too far from my wifi router. Switching from HD to SD seem to help as the lower resolution requires less or slower bandwidth
  • MN
    Mark N.
    2 February 2021 @ 06:31
    1 or more clearing houses asked robinhood to post more collateral... who are the clearing houses? who owns them? why does the ball get dropped when it comes to them?
    • MT
      Mike T.
      2 February 2021 @ 14:49
      facts please..... RH does Clearing in house. It was the Regulator that specifically required RH to put up more Capital, which suggests to me RH own risk management systems and processes were sub-optimal e.g. at one point RH were flying blind as to their own exposure likely they could not articulate their risk with sufficient clarity to satisfy the Regulator. One example of a clearing house would be Apex Clearing.
  • DS
    David S.
    2 February 2021 @ 14:05
    As an ordinary person, I am just looking at information to help protect myself from contracting COVID. Herd immunity does not stop the spread of COVID. It lessens the spread. Individuals who are vaccinated are safer from contracting COVID, but they may still be able to spread COVID. I say safer from COVID as the vaccine may be from 60 to 95 percent effective. This may mean that non-vaccinated individuals may get and spread COVID as it is being spread today. Vaccinated individuals have a much better chance of not getting COVID, but they may still be able to spread COVID. What will be the new definition of herd immunity if vaccinated individuals can still spread COVID? The people who are not vaccinated will run a higher risk of contracting COVID from individuals with active COVID and individuals who have been vaccinated. I reiterate, I am just trying to figure what a new normal will be. Can we travel safely? Can we dine in a nice restaurant safely? Can we go to the Super Bowl safely? My answer is that effective vaccines will greatly reduce the spread of COVID, but we will not be able to go back to normal lives. If we want to go to a bar, the vaccine is not enough. We need instant testing to get into the bar. If we want to fly, we will need instant testing to get on the plane. Vaccination and instant testing will help us to socialize again. A test that takes 48 hours to get the result will not help. You can even contract and spread COVID in that 48 hours. It is science that must help us make better decisions. “If” does not help. Paraphrasing Homer Simpson “I would be a vegetarian if bacon grew on trees.” DLS
  • MH
    Michael H.
    2 February 2021 @ 00:23
    i have my doubts about the validity of the S3 short interest model on GME. it's not a reported fact, it's an inference based on a model, and there were some ... interesting ... details about the announcement over the weekend. furthermore, i wouldn't expect hedge funds to report honestly even if it were based on reports.
    • CP
      Chamil P.
      2 February 2021 @ 05:48
      Exactly, a friend checked on Bloomberg and it was 61 million shares. So I'm not sure we can trust the data from anyone right now.
    • JD
      John D.
      2 February 2021 @ 06:22
      Chamil P. - Do you think it is that deliberate?
  • RB
    Richard B.
    2 February 2021 @ 04:25
    Enough, your options discussion is far over done. Also, exactly who is the monitor?
  • JM
    Justin M.
    1 February 2021 @ 23:47
    Glad to see Ed giving it straight: Silver going to be incredibly hard to move for retail, and there's a weak link at best to reddit mania.
    • JV
      J V.
      2 February 2021 @ 03:47
      I agree it's a weak link to the reddit meme, but silver is fundamentally different from a targeted short squeeze like GME. I read that virtually all dealers, both online as well as community coin shops are out of inventory and aren't sure when they will have new inventory with significant back orders. it seems to me that real yields being so low, and the clear signaling from the fed that they will remain low, along with a growing concern for currency debasement could give this some legs. I don't think this is a one or two week story like GME, but a story for this year and next. if the premium on physical remains significantly higher than spot price, and people continue to purchase the physical metal, is it possible that Comex will have outsized stand for delivery orders in the coming months? Is it hard to move - yes. But with the fundamental case for silver being strong, and technicals signaling a new bull is starting to get some juice, I think this could have the legs to run this year and next, and we could be looking at a materially different price for silver and silver miners in 6-24 months. I'm not looking for a 300% move this week or this month. but could we have a %200-%300 percent move between this year and next? not impossible imho. thoughts?
  • LS
    Lewis S.
    2 February 2021 @ 02:41
    Gamestop should pivot into NFT gaming, become an online crypto game swapping service, and put their treasury in bitcoin. Pity the fool that shorts that.
    • JD
      John D.
      2 February 2021 @ 03:17
      If that happened...
  • SS
    Steven S.
    2 February 2021 @ 02:08
    Ed, Jack and Haley: another greatly informative piece. Thank you.
  • OM
    Owen M.
    2 February 2021 @ 01:38
    Cabo all day for me!! Unless Raoul can host us all in Little Caymen.
  • GF
    Gordon F.
    2 February 2021 @ 00:58
    With regard to the silver short squeeze, I agree that the WSB forum has the magnitude to really move it. However, the massive short positions by a few big players is quite real, and if RV would really like to talk to someone who has studied this issue for 30 years, they should arrange an interview with Ted Butler of silverseek.com As I understand it, SLV is just an ETF that allows people to trade silver in their brokerage accounts without ever taking possession. The real short manipulation is on the COMEX futures market where the 8 largest players are short over 77,000 futures contracts (5,000 ounces each). I would LOVE to have one of the regulars interview Ted Butler.
    • JA
      Jordan A.
      2 February 2021 @ 01:33
      I've heard of this. I also saw a chart that implies it would take them 170 days to cover...
  • TC
    Tim C.
    2 February 2021 @ 01:30
    $GME 2/5 calls lost 2/3 of their value today (including after hours)
  • TC
    Tim C.
    2 February 2021 @ 01:28
    Silver will go up. Nothing to do with a short squeeze.
  • RP
    Rajiv P.
    2 February 2021 @ 01:16
    Volume was down in the WSB stonks today. Wonder what percentage of them are going to end up holding this bag...
  • SW
    Suzanne W.
    2 February 2021 @ 00:53
    Continued great coverage Ed and Jack!
  • TX
    Ticker X.
    2 February 2021 @ 00:48
    Thanks fellas, appreciate the insight. I'm still trying to figure out options and the shorting so your presentation was appreciated.
  • nd
    nic d.
    2 February 2021 @ 00:38
    When you guys say to get some PUT's on GME, you know who y'all sound like right?
  • MD
    Matthew D.
    2 February 2021 @ 00:04
    Gent's, you might want to have a chat with Adam Dodd's whom is the founder and CEO of FreeTrade.io, the commission free broker here within the UK. They've experience some issues during this recent volatile period, but they have handled it in a very different way to Robinhood. It might be interesting to contrast how both companies handled all of this. Just a thought....
    • JD
      John D.
      2 February 2021 @ 00:36
      Good suggestion!
  • AG
    Adrian G.
    1 February 2021 @ 23:57
    The silver meme is picking up a lot of steam from 4chan which makes Wall Street Bets look like the Real Vision Exchange
  • tc
    thomas c.
    1 February 2021 @ 23:56
    What I read on Reddit was not going after silver but sticking with Gamestop but I don't spend much time there. Silver has been bouncing around for several weeks showing signs of an uptick. Maybe enough WSBers helped the surge but I think Ed is right and the news narrative is wrong.