Where will the retail masses strike next?
After a 1,625% squeeze, the GameStop ($GME) market blitz has fizzled out.
That’s mostly thanks to market makers imposing tight restrictions on how many of each stock users can purchase. Not exactly a free market, but according to the financial elite, we should be happy with what we get.
After all, it is unfair for the masses to band together at the expense of some highly leveraged hedge funds!
It’s that exact sentiment that likely contributed to the mass Redditor/retail investor migration into silver.
Not only is silver fundamentally scarce, but it’s an excellent hedge against a fiscally irresponsible financial elite. Silver’s spot price now boasts a 60% premium above the largest silver ETF, $SLV. Will the price tag narrow over time? We think the opposite is more likely.
ETFs own a whopping 85% of total silver held in London. The actual supply of physical silver available for purchase is far smaller than most investors realize.
Bond yields climbing
It’s a brave new world: Short squeezes now come with some added spice — capital flight to scarce assets with wealth preservation characteristics.
The world seems to be partially waking up to the reality that all is not well in the Land of Financial Oz. Even bond yields are hinting that the iceberg of inflation is visible on the horizon.
Precious metals aren’t the only tool in the retail trader’s arsenal of inflation hedges and anti-financial elite market plays. Crypto has experienced a massive surge so far in 2021, with Bitcoin up over 60% YTD. Recently Dogecoin ($DOGE) surged over 500% on the back of a Reddit and Elon-fueled pump. Now even Snoop Doge Dogg has come out in full support of the meme currency.
The reasoning behind Snoop’s sudden interest in the lovable DOGE is still unclear. Perhaps he’s in it for the memes with his pal Elon — or maybe he’s satisfied with the likeness to himself (unsurprisingly, Doggs and Doges are in the same family).
On the other hand, who’s to say Snoop doesn’t want to hedge his portfolio in light of recent events?
Exhibit A: The meme tweeted by legendary rapper, Snoop Dogg
Elon’s foray into crypto is more clearly identifiable — his company Tesla recently purchased over $800 million Bitcoin.
The news sent Bitcoin hurdling to new all-time highs as Elon took to Twitter to continue his crypto meme crusade. So celebrities are actively investing in alternative digital assets when hedge funds are reeling. Wall Street has an egg on its face.
The icing on the cake? One company insider leaked information regarding Tesla’s gargantuan Bitcoin purchase months before the news formally broke on none other than Reddit.
Retail traders and celebrities aren’t the only groups to have begun their foray into the digital currency industry. The vast majority of hedge funds aren’t feeling any pain from the GME and silver short squeezes. Reality is often more gray than black and white… in fact, you could say it’s a Gray-scale (readers are entitled to a full refund on this terrible pun).
Beyond Tesla, investor Bill Miller, whose trust is in the top 2% in terms of fund performance for the past five years, recently announced he’ll buy into Grayscale’s Bitcoin Trust. The massive uptick in institutional investor interest in part explains the crypto market’s impressive moves so far this year.
The demand from institutions is so impressive that Grayscale has acquired 150% of the total amount of Bitcoin mined in January.
Absolute scarcity has its perks. As inflation once again rears its head, retail investors and institutions alike are taking note of assets that can help them weather the storm.
All eyes are on hedges, and crypto is perhaps the best hedge of them all.