Skip to content

GameStop, Silver And Bitcoin An Outlet For Collective Rage

As part of my interest in Bitcoin, I follow the financial news. The last week of January 2021 turned out to be very exciting. A group of investors on a Reddit forum – Wall Street Bets, had some months prior, discovered a weakness in the trading of a major hedge fund. 

This hedge fund – Melvin Capital held a substantial short position in relation to GME – the ticker symbol for a chain of retail gaming shops called GameStop in the US. Although the company appeared to be in good shape with strong cash reserves. By taking a short position at a level of 130%, the hedge funds appeared to be prematurely anticipating, if not ensuring the company’s untimely collapse.
 
The smart investor who spotted this weakness highlighted it to a number of other companions in the Wall Street Bets conversation. Before long they had persuaded a number of other Redditor investors to follow them into taking a long position against the shorts, effectively a ‘short squeeze’. With the net effect of creating serious financial difficulties for the hedge fund that held these short positions.
 
Distressing stories of hardships experienced during the 2008 financial crisis and the effects on parents and families. Tales of lost jobs, homes and businesses filled the forums as the emotional outpouring and passion for revenge egged on the little guy, for each of them were ‘David’ finally bringing down the ‘Goliath’ of the financial markets that had harmed them for so long.

As the momentum for this trade expanded and the share price grew beyond all expectations, millions of eyes were drawn towards this tiny little corner of the Internet that was about to bring down one of the big guys. Or so they thought.

They came close. The short trade ended up costing Melvin Capital many billions – the exact amount as yet undisclosed. The fund survived, but only just. Requiring an injection of capital to the tune of $3 Billion from other hedge funds in order to stay solvent.

Interest in this bet quickly trailed off, but as it turns out, this may have been the first initial, genius move, in a larger plan.
 
As the share price of the company, GameStop, rose exponentially, and in response to the vitriol directed at the hedge funds. There were many who were keen to point out that the greatest ‘short squeeze’ available in the financial markets, ever, has always been in silver. It has been asserted that silver is the most undervalued and one of the most manipulated assets on the planet and this has been discussed for many decades.
 
Yes, it might be a bigger market, but with all eyes now on GameStop – could these same enthusiastic and clearly aggrieved investors be persuaded to turn their attention to silver?

The financial news reporter Max Keiser led a campaign of ‘buy silver’ ‘crash JP Morgan’ in 2010 which was successful for a period of time and caused the price of silver to move from $11 to $50. As a result JP Morgan now holds 600 million ounces of silver to prevent them from being vulnerable to this kind of move again.

 
Ultimately the price of silver rebalanced in 2011 as the time wasn’t yet right. If the financial markets had been destroyed then, what would take its place? The final destruction was not yet ready to be fully implemented and so eventually the price of silver settled back down to its previous level.

 

This wasn’t the first time that someone had seen the same weakness in this market. The Hunt Brothers in the 1980s were aware of this too, once the dollar had been taken off the last remaining tether of honesty – the gold standard in 1971.
 
Their attempt to corner the silver market using leveraged futures met a similar untimely end.

And so here we are again. Many may say third time lucky. Will it be?

Certainly, the movements of GME have drawn worldwide attention to the inherent vulnerabilities that exist within our current financial system.
 
As the price of GME was rising exponentially, the Robin Hood App that facilitates such trades for the general population; prevented people from buying, just as the frenzy was reaching its peak. As a result, the upward trajectory of the price was halted and the hedge funds were saved from any further damage.
 
Considering that the rise of GME was accompanied by many touching tales, of children, now adults, who watched the elders in their lives lose everything in the 2008 crisis. Promises were made by the Wall Street Bets Redditors, that they would hold on to their investments for dear life, regardless of potential losses. In order to teach a well-deserved lesson to the banks.
 
The actions of Robin Hood in preventing these passionate investors from trading, just as the price rise was about to execute maximum damage, sent a howl of indignation and cries of injustice through the general population; starting an imperceptible crack in the manipulation of our existing financial world.

Undeterred, a new post on the Reddit forum highlighted the potential with silver and suddenly all eyes turned to this long-neglected market, that has endlessly disappointed resilient investors for many decades.

As it turns out there have been shortages in the supply of physical precious metal for the last year. As an investor in silver myself since 2016, I am aware of what typically appears to be available on various bullion websites.

There was a notable shock to this market in February and March of 2020 as the worldwide pandemic began to take hold. For the rest of the year, although precious metal products were available, the variety of products had noticeably depleted. As a result of this underlying trend, the price of silver is starting to see some gradual upward momentum.
Silver Coins

In hindsight, GME was able to highlight the perfect set-up.

Within days of the post about silver on the Reddit forum, the GME price started to fall as the Redditors lost interest and bullion stores around the world suddenly found themselves with overwhelming demand.
 
By the last Sunday evening in January, many sites had halted trading until the following morning. As I write this article, three days later, the price of silver appears stable and the shops are opening their doors for trading again. However, customers are being made aware of delays for delivery.
 
Could we be on the brink of something here? In many respects third time lucky? The Hunt brothers couldn’t manage it in 1980. Max Keiser was unable to pull off the full execution of his plan in 2011. But now, in 2021 with people stuck at home in lockdown, dealing with a never-ending pandemic, with large question marks over how the whole situation is being handled, a low grumble is festering into an imperceptible roar.
 
Governments are no longer allowing their populations to protest. People are constrained in terms of conversations with their friends at the local pub, or calmed by the balancing voices in their local community. All that is left, is to see what is happening in the media and find other ways, other avenues for the expression of their free will and to find a path to freedom.
 
It is during these times, on reflection, if one is able to think deeply enough. One is able to see the degree to which society is controlled by money, particularly in the west.
 
Without the furlough payments to keep people at home, such extended lockdowns would have been extremely difficult to pull off. Western governments are effectively bribing their populations to stay at home while they handle the pandemic in the way that they feel is best. And as long as the basic needs of the population are met, the majority are willing to comply. Aldous Huxley would be proud.

Not everyone is happy with these arrangements, however. Furlough payments have helped, but there are many who are suffering greatly. Worried about their businesses, the loss of their savings and severely restricted in terms of new ways in which to find an income and feed their families.

Many employees continue to work in the belief that their jobs are secure and that they have nothing to worry about. Completely unaware of the devastation of the company they work for occurring behind the scenes, and the implication this is likely to have on their future.
 
While comfortable and feeling looked after, everything seems okay, but actually, society sits on the brink of a dangerous tipping point. No one knows what the straw will be that breaks the camel’s back.
 
Society no longer seems fair, rightly or wrongly many feel that recent elections have been manipulated and that the people have lost their voice. Some see the corruption but turn a blind eye or feel powerless in order to change it.
 
But last week, a little corner of the Internet found an Achilles Heel and ‘David’ may well have found his chance to slay ‘Goliath’.

Will they pull it off? The signs are promising. The actions of the GameStop predators certainly drew worldwide attention briefly. In the process, many disillusioned silver investors who understand the importance of this metal became re-invigorated in their passionate calls to buy silver and encouraging their friends to take part.

It is always wise when planning a revolution to consider where it is that you want to end up. When you have achieved your goal when the party’s over and you are victorious. What is this new world that you have created in the process of destroying the old one?
 
Yes, many know how gold and silver used to be money and how our tie to it has been lost over many decades. The financial markets are now corrupt, demonstrated through fines for the manipulation of gold and silver prices.
 
This is the reality that we live with and there is no doubt that bringing down the pack of lies that has become our existing financial system will have some serious collateral damage. People’s pensions, people’s savings, and more importantly the welfare systems that many have come to rely on. Education, pensions, health services and unemployment benefits. Hardly anyone fails to be touched by these organisations in western civilisation, and yet many still fail to notice how these services are rapidly falling apart.
 
It can no longer be avoided. It is quite apparent that a new financial paradigm is on the horizon but what form will this take?
 
Some have already seen the money people at Davos in Switzerland talk about how in the future we will have nothing and be happy. Not many in the general population seem to like that plan, mainly because it brings up the most obvious question. Who is going to own all the stuff that we need in order to live our lives in the way we want? The apparent control and servitude inherent within that system leave many that love the idea of freedom feeling aghast.

It is my belief that our existing financial system is destined to crumble. Maybe the irony of GameStop being the hair that breaks the camel’s back, the one that initiates the crack that crumbles the existing paradigm and ultimately ‘stops the game’ of the chronically sick money masters, will play out. But where will that lead us, and will it bring us a future that is any better?

Until this point in history, particularly over the last 100 years, our money has been controlled by central entities. We have been cajoled into believing that this was in our best interests and in many respects have been bribed into doing so through our welfare systems. Will we continue to take the bribe? As the cracks in the financial system begin to widen, as pensions are lost, as welfare services continue to deteriorate.
 
We are already seeing this with the UK National Health Service (NHS). The pandemic is pushing the NHS to the brink, although many acknowledge that the NHS has been in trouble financially for many years.
 
Our education system is cracking as our children are now being conditioned to believe that they can be schooled from home through the Internet, and everyone is ending up on a form of unemployment benefit, whether it is through actually being unemployed or through subsidised furlough payments. In the background business entities are slowly being strangled to death and allowed to fail.
 
Central-bank digital currency is an idea that has already passed the lips of many of the central bankers who scare us into believing that unless they maintain control of the system and thereby maintain control of our currency, the bad guys are going to continue to get away with bad stuff.
 
Bitcoin typically tends to get the blame for this as they conveniently overlook that actually the majority of crime tends to be funded by the US dollar and many banks have been caught aiding and abetting their activities, as shown through various money laundering fines and prosecutions.
 
Will these people be able to convince us that we need one of their currencies in order for the world not to fall apart? Or will we be able to persuade our friends and family that what we really need, is a currency that does not rely on any of them?
 
One that has been engineered, through well-designed incentives, to remain fair and never subject to any one individual, or group of entities – Bitcoin. 

War in the financial world is about to begin and you need to be prepared, but are you ready?

If you want to join the revolution, now is the time when everyone is about to hoard silver, but ultimately – you want to own Bitcoin.
 
Until next time enthusiasts!
 
Victoria

Interview with Dentists Who Invest

Check out this clip on ‘Gold and Silver’ from my recent chat with James Martin from the Facebook Group – Dentists Who Invest. If you would like to see more of these clips and the full interview.

Published inNewsletters