Select Page

What Does the Stock Market Speculation Mean for Silver Investing?

What Does the Stock Market Speculation Mean for Silver Investing?

Wall Street and the stock market is plagued by speculation, but tangible real assets such as silver as an investment are safe from their manipulation.

Even if you haven’t followed the news media closely over the past couple of weeks, you’re surely familiar with the debacle involving Reddit and Wall Street over GameStop and AMC.

Social media has become a powerful force in politics, shaping election outcomes, and now also in trading. Reddit users took it upon themselves to go up against the speculative trading of huge hedge funds who were betting against GameStop, a struggling video game retailer. As a result GameStop’s shares soared over 1,000% within just one week. Earlier this week, as the popular trading application Robinhood imposed strict limits on share purchases and hedge funds closed their positions, GameStop shares dropped to below $90/share.

The wild ride of the GameStop stock has shown the volatility of the stock market.

What does the battle between Wall Street and retail investors say about the stock market? 

The Wall Street and retail investors battle tells us a story of how volatile and unpredictable the stock market is. Stock prices can move suddenly—and significantly—based on speculation, market manipulation, and even government intervention—not on fundamentals, which should be the drivers for these price changes. In the new world we live in, fundamentals don’t matter.

And what about silver? This past Monday, silver surged as much as 13%. Some sources claim that the next target of the retail investors is silver, while others claim that big money, not day traders, may be behind the silver rally. So we have to unpack two questions here: Why is silver rising and who’s actually moving the price of silver? 

Why is the price of silver soaring?

If we look at silver over a longer period of time, we’ll see that the precious metal is about 50% below its recent high achieved in 2011.

The price of silver has gone up recently, but it's far from it's decade-old high. That means there is a lot of room to grow for silver as an investment.

That stands in stark contrast to other assets, including gold and stocks, which have all set new records or are in record territory. 

Here is what the stock market looks like—it’s been in record-high territory for more than four years:

The stock market has been setting new records regularly over the past decade, meaning we're ripe for a stock market crash.

Even gold has surpassed its all-time high:

The gold price has soared over the past 20 years, making gold as an investment attractive.

You can say the same thing about real estate, bonds, and even Bitcoin. All assets are at an all-time high….other than silver. 

One could easily make the argument that silver is simply playing catch-up with stocks, gold, and other assets as it’s the only asset that has not come even close to its all-time highs. What we are witnessing is most likely a surge in the price of silver due to its fundamental movers, one of which is the Fed’s extraordinary money printing. 

Does it matter? I think so. When fundamentals are not involved, and when manipulation dictates price action, you are unable to determine if your investment is low-risk or high-risk. If money printing is causing this movement, then all you need to ask yourself is if it’ll stop. If so, your investment has peaked. If not, we have not seen the end of the rise of silver prices.

Is the government siding with Wall Street?

While the dust is starting to settle on the recent stock battle between retail and institutional investors, the last word has not been said yet. Commentators and lawyers are calling for investigations, and Nasdaq chief Adena Friedman said exchanges and regulators must pay attention to the potential for “pump and dump” schemes driven by chatter on social media. Treasury Secretary Janet Yellen just called for a meeting with top federal regulators to address the recent market volatility on Wall Street spurred by so-called “meme stocks.”

Here’s a question for you to think about: Why are regulators stepping in now when Wall Street has been shorting stocks for decades with little to no repercussions? 

If regulators are investigating potential misconduct now, is it because they see wrongdoing by Reddit users, or is it because these users have brought the true nature of the stock market to everyone’s attention? 

It is pretty clear—the stock market is a roulette table at a casino, with a magnet controlled by the casino owners (Wall Street). But the bets are made with your IRA and 401k money.

How gold and silver protect you from Wall Street

As an investor, you should be concerned about the volatility of stocks. Afterall, the typical investment portfolio contains mostly stocks and bonds. 

But you may also be one of a growing number of investors who have peace of mind because they’ve properly diversified their investments.

You diversified your retirement savings to protect them from stock market volatility and financial crises. Precious metals are great additions to a portfolio since they are uncorrelated with stocks. 

So, while a lot of attention is going towards silver these days because the metal may be the focus of investors on social media, there is another and more important reason you should care about silver: it has lots of room to grow before it hits the all-time high it reached 10 years ago.

Just make sure you’re diversifying with physical silver, not paper contracts such as silver ETFs—ETFs keep you in the Wall Street casino. But with a portion of your portfolio invested in real physical metals, that portion will stay outside the casino. If you rely on exchanges and paper contracts, the rules can always be changed to terminate your bets and rob you of future profits. But with physical precious metals, you can keep your silver—and your profits. 

Here’s the most recent proof: recently, as the price of silver went up nicely, the prices of physical silver coins and bars jumped through the roof as they are sold out across many dealers nationwide while the mints are reporting a shortage of product. 

This shows you one difference between real silver and “paper silver”: at times of great demand, the physical products react according to fundamental demand, while silver ETFs may not as their price is dictated by Wall Street and large financial players. 

Last week, silver ETFs went up by 15%, but real Silver American Eagle coins went up by more than 35% as product premiums charged by mints and large wholesalers more than doubled. Real asset under real demand = real returns. 

What all this should be telling you is that it’s a sound idea to have a portion of your portfolio in an asset that has room to grow, one that grows based on real fundamentals. This portion will protect you from the volatility of the majority of your assets held by the Wall Street casino.

May you be healthy and safe during these trying times.

Joseph Sherman

Joseph Sherman

CEO, Gold Alliance



The post What Does the Stock Market Speculation Mean for Silver Investing? appeared first on Gold Alliance.