Posted 5th February 2021

Silver short squeeze: the long-term impact on the silver markets

Minting just got quicker Kinesis

Andrew Maguire explores the long-term impact of the ‘Silver Short Squeeze’ phenomenon on the silver markets

Watch this week’s Live from the Vault for:

  • Impact on gold and silver markets: 05:31​
  • Should I trade SLV? 10:48​
  • Insiders gathering physical silver: 15:40​​
  • Disruption in Gold Futures 24:04​
  • Bullish conditions for gold 25:43
  • A look at the technicals 28:34​​
  • Where can you get physical? 31:08

Although the market swell of Reddit’s leveraged traders has subsided, Andrew Maguire anticipates that this week’s action will have a lasting impact on the silver market. With the global spotlight shining on billions of dollars of bearishly skewed, potentially vulnerable bets – what does this mean for silver going forward?

Silver short squeeze market disruption

Along with the rest of the world, market making insiders were clearly not prepared for this massive influx of Reddit-leveraged silver interest, according to Andrew Maguire.

The precious metal expert explains that, historically, insiders have been able to take the short side of spec longs with impunity. As insiders are secure in the knowledge of the pain points of those specs who borrowed longs, sitting on their books. However, Andrew Maguire reports that the sudden tidal wave of individually held SLV-focused interest made it extremely difficult for insiders to calculate these pain points.

In Andrew Maguire’s opinion, such a large diverse swarm of buy flow, seeking thousands of tonnes of leveraged long options, threatened to take the lid off the entire silver capping manipulation process. Looking ahead, the precious metals expert believes such monumental external interest has the potential to shift risk-reward metrics, disincentivising the naked short selling of silver and gold.

What does this mean for silver?

As Andrew Maguire sees it, the degree of this week’s unforeseeable open interest diminishes the leverage of First Majestic, as well as many other well-shorted silver related stocks. In turn, Andrew Maguire predicts this will weaken the insiders’ grip on the gold and silver stock index lever – a crucial component of their price capping strategy.

The precious metals expert believes this upsurge of fresh open interest will bullishly dislodge the much larger and more liquid GC and SI anchors. Positions that have long been relied upon to maintain the insiders’ casino-like 95% win metric, according to the precious metals expert. In Andrew Maguire’s opinion, these changes will impact the way insiders position in SI and GC, with a particular focus on naked shorting silver, gold stocks and indexes.

Andrew Maguire’s parting thought

The dust has not settled, in fact, the storm is just beginning, and this undoubtedly will change the game forever.

Next Episode: Andrew Maguire reassess the gold and silver markets in the wake of this week’s action.

Make sure you catch next week’s Live from the Vault.

The opinions expressed in this publication are those of Andrew Maguire and do not purport to reflect the official policy or position of Kinesis.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.