Why the Silver Trade Shouldn’t Be Lumped In With GameStop Stock and AMC
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Why the Silver Trade Shouldn’t Be Lumped In With GameStop Stock and AMC

By JACOB SONENSHINE
Wed, Feb 3, 2021 4:24amGrey Clock 3 min

Silver soared, then dropped. Whatever happens now, the metal’s price movements will look nothing like what happened with the stocks that faced a spectacular short squeeze and are now falling.

Monday, the price of actual silver rose as much as 9% to $29.52 per ounce. “Retail traders who drove the short squeezes in stocks like GME last week were banding together to try and trigger a squeeze in silver,” wrote Tom Essaye, founder of Seven’s Report Research, in a note.

It all revolves around the practice of short selling, where people borrow a stock and sell it, hoping the price will fall, making it possible to buy shares at a lower price and return them. A short squeeze happens when the price of the stock rises, rather than falls, forcing short sellers to buy. If a lot of the stock available for trading has been sold short, there can be a scramble to buy that triggers spectacular price gains.

That is what happened with GameStop (ticker: GME) last month. Other stocks that had been aggressively sold short surged as well.

But the iShares Silver Trust (SLV), after rising 11% to $27.76 a share Monday, is now down 11% from that level. There are key differences between companies like GameStop and AMC Entertainment (AMC) and silver.

First off, GameStop rose as much as 1,800% in a few weeks in January. AMC rose as much as 890% in roughly the same period. The iShares Silver exchange-traded fund, which buys futures contracts linked to the direction of the metal’s price, rose to roughly its all-time high of $27, set in August, and failed to break past it.

With the price down Tuesday, fundamentals, rather than the possibility of a short squeeze, are returning to the fore. While silver is an asset that can take part in a “reflation rally,” or one that occurs when economic stimulus jolts an economy out of recession and spurs inflation, that possibility doesn’t seem to have been enough to send the silver ETF to a new high.

Importantly, options trading was an important factor in the gains for GameStop and AMC. Retail traders were buying calls, or the right to buy shares at a specified strike price on a later date. The hope is that an option’s strike price will be lower than the stock’s price when that day comes, making it possible to buy at the strike price and make a profit by immediately selling on the open market.

That possibility forces the brokers who wrote the options contracts to hedge by buying the shares. It adds to demand for a stock and can contribute to a short squeeze, as appears to have happened with GameStop and AMC. Retail traders posting on Reddit were able to move the stock without much capital because they could buy call options at a far lower price per underlying share than the cost of the actual stock.

For silver, the overarching theme is that retail traders can’t summon up the large pool of capital needed to create huge demand for silver.

Traders aren’t buying calls on silver right now, Andrew Smith, chief investment strategist at Delos Capital Advisors, told Barron’s, citing the activity he saw Tuesday. That’s partly because buying calls on commodity ETFs, which reflect a blended forward expected price—based on the prices forecast for several different dates—is a complex process.

Buying silver outright, which is what retail traders did, requires much more money. There are no call options and no need for brokers to hedge against them.

“Squeezing the market isn’t likely” from here, wrote Jeff Currie, global head of commodities research at Goldman Sachs, in a note. In order for the WallStreetBets crowd to send silver prices up the 700% they rose in 1980, when the wealthy Hunt brothers gobbled up almost one-third of the global supply, they would have to own 4,600 tons of silver each.

Silver could certainly charge ahead, just not so fast so soon.



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Milestone birthdays and anniversaries, weddings, and graduations are momentous life occasions that some like to mark with large and elaborate celebrations.

And the deep-pocketed set are still in catch-up mode after a party-throwing standstill during the pandemic that went on for many months during the height of the lockdowns and social distancing. Bashes since then have become ever more extravagant and experiential—mere get-togethers, they’re not.

Hosts are also seeking any excuse to throw an event and having parties with the same “wow” factor for far less significant reasons, or for micro-occasions as they’re called, and even “just because,” according to luxury event planners who work with this elite set.

Colin Cowie, a planner based in New York and Miami who regularly orchestrates multimillion-dollar gatherings and was behind Jennifer Lopez’s and Ben Affleck’s wedding, calls it the “event revolution.”

“Large-scale events have become the norm,” Cowie says. “The wealthy, who are used to celebrating their life moments in a big way couldn’t do anything during the pandemic and are now going all out for anything they host.”

His company, Colin Cowie Lifestyle, plans 30% more events today than pre-Covid and has a lineup booked for the next two years. An example includes an upcoming million-dollar dinner party in the Hamptons simply to socialise with friends. It’s an affair with free-flowing Dom Perignon, centre-cut filet mignons, and unlimited caviar.

Colin Cowie Lifestyle plans 30% more events today than pre-Covid
Calen Rose

Other high-end planners also attribute the rise of over-the-top celebrations to a “live life to the fullest” attitude that’s become prevalent in the last few years. But they say that these parties aren’t necessarily about spending more than before—rather, they’re increasingly creative, thoughtful, and, with respect to weddings, longer.

Lynn Easton, a Charleston-based planner, says that her typical wedding used to span two days and entailed a rehearsal dinner plus the wedding itself. “Now, it’s a five-day bonanza with events like a groomsman lunch,” Easton says.

Easton also plans glitzy milestone birthdays such as one for a 60th where the host flew 60 friends and family to a private island. Dinners were multi-hour affairs in various locations around the isle with the showpiece being a five-course meal where the food was presented on dishes that were hand-carved in ice.

Another planner, Victoria Dubin, based in New York and Miami, says that, in a new precedent, the weddings she’s tapped to design kick off with striking welcome meals. She recently planned an al fresco rehearsal dinner at the Brooklyn pizzeria Roberta’s that recreated a Tuscan garden. Elements included potted herbs, lemon trees, vintage olive oil cans, ceramic plates, and table cards presented with palm leaves in limoncello cans.

Another planner, Victoria Dubin, recently planned an al fresco rehearsal dinner at the Brooklyn pizzeria Roberta’s that recreated a Tuscan garden.
Aletiza Photo

Pashmina shawls hung from chairs to keep guests warm, and freshly baked pizzas and Aperol spritzes were in ready supply throughout the evening.

Stacy Teckin, the groom’s mother, hosted the party with her husband, Ian, and says she sought to pull off a dinner that made an impression on their guests. “The wedding was delayed because of Covid, and now that we had the chance to celebrate, we wanted to go all out,” Teckin says. “I’m not sure we would have done that before.”

In another example, acclaimed planner Norma Cohen threw a wild safari-themed bar mitzvah for a client.

A four-day wedding in Paris where the ceremony was in a historic chateau and the host paid for guests to stay at Hotel Crillon
Norma Cohen Productions

The memorable occasion transpired at Spring Studios in downtown Manhattan and saw 400 guests be transported to the African plains: Details included mammoth replicas of wildlife such as giraffes and elephants, servers in safari themed attire, and entertainment dressed like giraffes. The event was one of several over-the-top parties Cohen’s arranged recently.

A four-day wedding in Paris where the ceremony was in a historic chateau and the host paid for guests to stay at Hotel Crillon, one of the city’s most luxurious properties, also ranks high in Cohen’s memory.

Then there’s a destination party in London that Cohen planned for a client who was turning 40. It as a six-day affair with dinners at swanky spots such as Cipriani, the Arts Club, and Cecconi’s at Soho House. The finale was Lancaster House, a mansion in St. James, where guests were entertained by cabaret dancers from the famed Ibiza club Lio Ibiza and feasted on prime rib and lamb chops and imbibed on Krug champagne.

“People today don’t want to host events,” Cohen says. “They want experiences that take you away to a different place and make you forget that the real world exists.”