Silver prices rose on Monday, reaching a maximum of eight years.
The growth was possibly linked to the online WallStreetBets community on Reddit, a group of retailers that played a major role in GameStop’s growth last week.
Three experts broke it down.
Jim Cramer, host of CNBC’s “Mad Money” program, discussed the complex nature of investing in precious metals, which faces its own limits as a resource.
“People need to recognize that silver, while a precious metal, is used primarily for LEDs. It is used a lot for cars, obviously a lot for jewelry. When you take it, you are talking about a market that is very small. There are only two stocks that are truly investable … Pan American Silver has 17.5 million ounces of silver, they failed to deliver the amount they would like to do. I predict that this year it will make 22.5 million, which is actually very high. The other one I find is, say, worthy of investment is Wheaton Precious Metals. The stock is big, they have about 120,000 ounces a year that they intend to take out and then everyone else is really too small. Obviously, people use silver ETFs. Do I think they are misdirected in terms of takeover? I think if you think GDP will grow, you might earn something in silver, but it’s GDP-oriented. This is the first thing they aimed at, which honestly has a myth because there isn’t that much money out there. But at the same time, when used it is not ornamental. Therefore, you really need an intensification in business to do this invaluable. “
Mohamed El-Erian, chief economic adviser to Allianz, linked the increase to the shortening of GameStop and how the conflict between retailers and hedge funds could evolve.
“The fact that you can get people to look at silver and, in the process, they look less at GameStop, and because of that, there’s less concern that hedge funds that are short GameStop will sell, means you can have an impact. on many So do not underestimate the short-term influence. As for what will happen, look, there is a major fight between three actors, not two. Three: hedge funds that are short GameStop, retail investors that are long, and people in the middle. And the question of where to go, is who has the weakest hand? Who will fold first? Who will not be able to stay in that trade? Now, historically, who was the retail investor. But retail investors are more organized right now … If they can stay organized, they can force hedge funds to cover more. But today, you get the idea that maybe I can’t stay organized so we’ll see. The only thing that is systemically worrying is whether in the fall term. This is a completely different matter than if the two sides of the transaction are in doubt. “
Joe Moglia, former CEO of TD Ameritrade, noted the growth and demographic advancement of retail investors.
“Schwab, Ameritrade, E-Trade, even Robinhood has the best interest of the individual at heart. All the activities we do with Ameritrade or Schwab are with individuals or financial consultants who work with individuals. So at the end of the day, the tools and the ability that the individual has today, [are] much bigger than they were five years ago, and that was much bigger than they were five years before. So, if 2020 was the year in our country where we had a lot of upheavals and everyone looked at race, politics, sexuality, equality, maybe 2021 is about the equality of individual investors and they have the tools and skills to be able to execute these transactions. They have the tools. They can be taught skills. But they need a better education so that they understand what the disadvantage is and understand what their risk is. “
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