Silver Yo-Yo

The price of silver is going up and down like a yo-yo. On Sunday and into the first part of Monday, the price skyrocketed on news that Reddit was touting the metal. But as the data clearly showed, the price was not driven up by retail buying of physical metal.


Silver, March futures from Jan 27, 30 minute chart: a lot of volatility, but silver seems to have established a higher low after coming down from the initial spike. [PT]


To be sure, there was retail buying. But even if they depleted the finite inventories of Eagles and Maples, they were not the buyers that pushed the price up to $30. That would be the futures speculators.

Speculators use the futures market because it offers great leverage. But leverage gives them itchy trigger fingers, and they will sell to take profits or stop losses at any time.

That time began around 15:00 GMT Monday, and lasted through 6pm Tuesday. On Tuesday alone, the price dropped two bucks.


The Retail Buyers

The premiums on retail silver products were high on Tuesday, showing that retail buying persisted. Though it must be noted that they dropped later in the day.

Retail can buy a lot of silver—eventually—but they are drinking through a fairly narrow straw. We refer to the limited manufacturing capacity of coins and other precision-minted products. If high retail demand persists, then high premiums will sooner or later incentivize mints to buy more equipment. We shall see how long this latest wave of demand endures.

Here is a graph of Tuesday’s silver market action.


Close-up of Tuesday’s action in silver…


The basis drops from 3% to 1%. This selling, like the buying before it, was predominantly in the futures market. The speculators dove in with both feet, tread water for a brief moment, then leapt out of the pool again.


What’s Next?

The direction of the next move—and its durability—now depends on retail buyers.

If they keep buying, undeterred or even spurred on by this price drop, then silver metal will become more scarce in the global market. And the price will rise. And the speculators will likely jump in again, but perhaps be less twitchy to get out.

Fear of Missing Out can be a powerful motivator. Then we could easily see a move to $40 or more. But if retail buyers have had their fill of volatility, and/or Reddit moves on to the next thing, then we are back to the silver market of mid-January.


© 2020 Monetary Metals


Charts by, Monetary Metals


Chart annotations and image captions by PT where indicated


Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.




Emigrate While You Can... Learn More




Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.


Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA


One Response to “Reddit Residue on Silver”

  • Galactus:

    I’d love to see an article explaining the divergence of the spot pricing of silver vs. the price in the physical market.

    For example, as I type this spot market is $26.10, yet you can’t score a generic 1 oz. round for under $32 right now with decent quantity(100oz order at a dealer- $36.50 off of ebay for immediate shipment). 19% premiums seem a bit high….even if you get 100oz generic bars they are around $3070, which is still around 15%

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • No results available

Support Acting Man

Austrian Theory and Investment


The Review Insider


Most Read Articles

  • No results available

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts


Gold in USD:

[Most Recent Quotes from]



Gold in EUR:

[Most Recent Quotes from]



Silver in USD:

[Most Recent Quotes from]



Platinum in USD:

[Most Recent Quotes from]



USD - Index:

[Most Recent USD from]


Mish Talk

    Buy Silver Now!
    Buy Gold Now!