Steve,
Edit Most important thing first: They will bail you out if you are one of them as we have already seen with GME, Cohen, Citadel. Point72 and Melvin Capitol. Even when there is no question who the manipulators are.
“To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal.”
So I was thinking that we would meet for lunch and I would be long gone by Thursday. Timing is everything.
Before Hunt’s Thursday reckoning silver did this (from your link):
“In 1979, the price for silver (based on the London Fix) jumped from $6.08 per troy ounce ($0.195/g) on January 1, 1979, to a record high of $49.45 per troy ounce ($1.590/g) on January 18, 1980, an increase of 713%.”
I had already thought of the Hunt brothers and one reason I mentioned other banks (probably “other investors” would have been better). I am not sure all investors are short. So:
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Silver can be manipulated as you point out. And some say it is very manipulated now (prices kept low).
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It may not be just the Reddit crowd interested in this but they are a new force that is active now (see below about other potential players).
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Some wealthy people are sympathetic to the Reddit crowd. Like Mark Cuban who has posted on this. And he is not restricted by Robinhood I would guess. Marco probably does not call himself rich in this time of money printing (I certainly do not). But he is in the business, sympathetic and I do not expect he will comment. But no one could fault him for buying a commodity in this time of potential inflation and picking the one that he thought would do the best all things considered—including what is being published on mainstream sites like Bloomberg about short interest being massively high. People run ports on this idea without it being called manipulation.
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Some banks have a long interest in silver. For example Wells Fargo & Company as well as Morgan Stanley are among the top 10 holders of PSLV. Maybe they do not like the idea that silver’s prices may be manipulated against them and they might want to buy because it is cheap now—nothing wrong with that especially if they are proven right about silver being cheap.
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Exchanges changed the rules then. They have and will now. That needs to be considered. Probably argues for buying some Vanguard ETFs. Probably an exciting bond fund—you know with foreign bonds to make sure your investment barely keeps up with inflation no matter what the dollar does. Actually I have some (leveraged) US bonds in my portfolio so I am not really against this.
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The shorts may squeeze themselves to some extent. They do not want to be accused of manipulating the markets either (to the short side) and may get rid of any ridiculous-looking short positions. And could be worried about a squeeze and want to get ahead of it.
But realistically maybe it is 50-50. Just 50% chance that SLV is up 100%. And 50% chance that any squeeze that has already occurred falls apart: perhaps SLV falls 20% then.
Which would you regret more? Being in and losing 20% of your investment or being out of silver and missing out on a doubling. Use your own numbers for likely gains/losses.
Pick you own numbers for what you think could happen and size your positions according to you own “regret minimization strategy” would be my advice. Another game theory consideration I am afraid: This time from Texas No Limit Hold’em.
I was going to buy some precious metals anyway. I think instead of gold, platinum or palladium I will buy more silver than I originally planned and adjust my ratio of holdings going forward according to what unfolds. My position size will probably be about what I was planning anyway. I would regret a 20% loss compared to gold or palladium. But I would regret missing out on any fun more.
The Hunt brothers are an important consideration that I thought of myself. Thank you for posting about them.
Jim