01/31/21 ANDY HOFFMAN (CryptoGoldCentral.com, DLCC.co):Wall Street Bets, Bitcoin, And The Upcoming, Attempted Silver Squeeze
I rarely feel compelled to write these days - as after HODLing Bitcoin, and helping Digital Lending Capital Corp advance its mission of becoming the leading crypto Prime Brokerage platform, there’s not much else that motivates me.
However, the emergence of Wall Street Bets as a real-life, heavily armed challenger to age old Wall Street fraud is one of the most exciting developments of my three-decade career. The reason being, that I’ve fought “the powers that be” since 2002; first, in Precious Metals, and now Bitcoin…and now, it appears the end game of history’s largest, most destructive fiat Ponzi scheme is finally upon us.
As a borderline charter member of GATA (the Gold Anti-Trust Action Committee), I spent 15 years documenting the Gold Cartel’s every movement – watching Central banks and their henchman, banks like JP Morgan to miners themselves (like Barrick Gold) destroy the Precious Metal markets. In the progress, they devastated the mining industry; likely irreversibly diluted the bullion markets; and caused the PM sector to underperform essentially all asset classes.
However, as ALL fiat currencies ultimately die, I always knew it was only a matter of WHEN and HOW something took the current, hideously grotesque system down. Backed by dramatic technological advances in market manipulation, plus propaganda and game theory that incented all Central banks to work together, it has successfully maintained confidence in fiat currency, and suppressed man’s obsession with Precious Metals’ monetary properties. By even the best Ponzi and pyramid schemes ultimately fail – which is exactly what HAD TO ultimately happen here.
When Bitcoin started to mature, the HOW finally came into focus – as not only is BTC superior to Precious Metals in all aspects, but immune to the paper dilution of the gold and silver markets. Governments’ response to the (self-created) COVID crisis put the frailties of fiat currencies in focus, so the stage was set for what sound money believers knew was inevitable the day the gold standard was abandoned in 1971.
Until last week, I would have said a parabolic Bitcoin would be the ONLY catalyst to said End Game. However, the emergence of the populist financial movement Wall Street Bets – a real-world version of Mr. Robot’s F-Society – may well accelerate the process, by attacking entrenched, illegal short positions in the equity and Precious Metal markets.
Regarding the former, blowing up hedge funds’ naked short positions will dramatically weaken confidence in the hideously fraudulent, but until now masked by manipulation, nature of legacy stock and bond markets. However, the biggest losers in this game would be overleveraged hedge funds, as opposed to the major banks and government institutions that would be the primary victims of a successful silver short squeeze. This is why the imminent silver short squeeze attempt (futures markets open less than three hours from this posting) is so interesting.
GameStop itself will be an interesting scenario, given that the short position of it (and others like it) remains above actual shares outstanding. However, the silver market is MUCH larger than GameStop, particularly as the “paper silver” market is thousands of times larger than the underlying bullion market – with its manipulators, led by the U.S. government itself, willing and able to produce limitless naked short contracts. And TRUST ME, they will!
I understand Wall Street Bets’ M.O. of breaking illegal, over-levered short positions, but there’s far more at stake in the silver market than mere stocks. Plus, silver is no more likely to be a major monetary asset in the future as retail stores major players in the future video game market – although at least, GameStop can change its business model to focus online, whilst silver will never be able to compete with Bitcoin. Yes, silver will do just fine if the dollar is indeed destroyed – but will be increasingly difficult to trade in such a scenario, and a very, very distant third option to Bitcoin and gold.
The biggest problem with attempting a silver short squeeze is that it will NEVER succeed unless massive demands for PHYSICAL DELIVERY are undertaken and sustained – which, aside from the creation of the Sprott Physical Silver Trust in October 2010 (the REAL reason silver surged by $50 in April 2011), has not occurred since the Hunt Brothers attempted it in late 1979…at which point, in Robin Hood like fashion, the CFTC changed the rules, making it illegal to BUY silver at its highs.
I don’t believe that even a successful SLV short squeeze – which itself, will be extremely difficult to accomplish – will trigger enough physical silver demand to truly break the Cartel…let alone, that it would actually be delivered. This is why the attempt will be so fascinating – as in today’s world of social media flash mobs; and unprecedented knowledge of, the “powers that be’s” vulnerabilities; who knows what may happen?
If it miraculously succeeds in breaking the Gold Cartel, all hell will break loose in the financial markets. HOW it would play out, I’m not sure – but what I am sure of is, that Bitcoin, by far the soundest, and most unconfiscatable money every created, would be the biggest winner.
If not, it will only cause Wall Street Bets’ to shift its focus to the ONLY market where beating the powers is likely, if not guaranteed – which is, the extremely scarce, and heavily undervalued Bitcoin market. To that end, even a successful silver short squeeze would not make it “more monetary”; and likely, would make it LESS liquid as bullion dealers run out of inventory and become saddled with massive regulations and taxes.
No one is rooting for Wall Street Bets’ silver squeeze attempt to be successful more than me. However, I am skeptical they will win – and even if they do, believe silver’s monetary premium is declining (due to Bitcoin) with each passing day.