![]() Multiple factors contributed to the soft start to the year for gold, including the change in the White House, and Democratic Party wins in the Georgia Senate election runoff, which raised hopes of a circa USD 2 trillion economic stimulus package. ![]() Silver fared better, rising by 3.5% to USD 27.42/oz, with the GSR falling to 68 by the end of last month, after starting the year at 71. The price of gold eased marginally in January, falling by 1.26% to end the month at USD 1863.80/oz. The announcement of an additional AUD 100 billion in Quantitative Easing (QE) from the Reserve Bank of Australia (RBA), and a decline in iron prices may mark a top in the Australian dollar, which traded as high as USD 0.78 in January.A mania in meme-stocks and rumours of a short squeeze in silver captured market attention in late January, with volatility surging in select company share prices.Risk assets continued to rally, with equities and cryptocurrencies hitting all-time highs.Silver ended the month above USD 27/oz, rising by more than 3%, with the gold to silver (GSR) ratio finishing January at 68.The USD gold price fell marginally in January, ending the month at USD 1,863.80 per troy ounce (/oz). #Silver short squeeze driversWhile long-term drivers remain supportive, the current euphoria in financial markets, an increase in bond yields, and rising optimism regarding a huge economic stimulus package from Washington, have acted as short-term headwinds for precious metals, which remain in a consolidation phase. That is a completely different issue than if the two sides of the trade fold.Precious metal markets were mixed in January, with gold down marginally, while silver rose. The one thing that is systemically worrisome is if the intermediary falls. But today, you get a notion that maybe, they cannot stay organized. … If they can stay organized, they can actually force the hedge funds to cover more. But the retail investors are more organized right now. And the question as to where it goes next, is who's got the weakest hand? Who's going to fold first? Who is not going to be able to stay in that trade? Now, historically, that has been the retail investor. Three: the hedge funds that are short GameStop, the retail investors that are long, and the people in the middle. ![]() As to what will happen, look, there's a major battle going on between three actors, not two. So, don't underestimate in the short term the influence. "The fact that you can get people to look at silver, and in the process, they look less at GameStop, and because of that, there's less worry that the hedge funds who are short GameStop are going to sell, means you can impact lots of markets. Mohamed El-Erian, Allianz chief economic advisor, connected the rise to the GameStop short squeeze, and how the conflict between retail traders and hedge funds could play out. So therefore, you really do need a step-up in business, in order to make that invaluable." But at the same time, when it is used is not ornamental. This is the first thing that they have targeted that, frankly, has a limit because there's not that much silver out there. Do I think that they're misdirected in taking it up? I do think that if you think that GDP is going to grow, you might have something winning in silver, but it is GDP-oriented. Obviously people are using ETFs in silver. The stock is up big, they have about 120,000 in ounces per year they intend to put out, and then everybody else is really too small. The other one that I find that is, let's say, worthy of investment is Wheaton Precious Metals. They're predicting this year to do 22.5 million, that is actually very big. There are only two stocks that are really investable … Pan American Silver does have 17.5 million silver ounces, they failed to deliver on the amount that they'd like to do. When you take it away, you're talking about a market that is very small. ![]() It's used a great deal for autos, obviously a great deal for jewelry. "People need to recognize that silver, while a precious metal, is chiefly used for LED. Jim Cramer, host of CNBC's " Mad Money," discussed the complex nature that comes with investing in precious metals, which faces its own limits as a resource. ![]()
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