What Are the Chances?
Weighing against such a possibility is the liquidity and depth of the silver market compared to the GME market. The GME market cap was under $3B prior to its runup. Estimates of how much silver bullion is in human hands vary widely (as with gold, there is no way to tell exactly). To make the math easy, assume at least 3 billion ounces in bullion form. That means the total “market cap” of silver is 25 times greater than that of GME (not counting tea services, silverware, and candlesticks).
Another argument against is that it does not have that incredible short overhang of more than 100% of the outstanding shares (notwithstanding conspiracy theories that persist even after our Thoughtful Disagreement with Ted Butler
, debunking them).
Finally, there is a strong component of “sticking it to the man” with buying GME. Teaching Wall Street a lesson. Hoisting them by their own petard. This does not apply to silver (though some people believe it does).
However, there are some strong arguments in favor as well. Being that GME is losing money, and is in a bad industry at a bad time, we assume that most people would not want to buy the stock no matter what the reason. This negative obviously does not apply to silver.
Perhaps most importantly, both the Treasury and the Fed (and their counterparts all over the world) have gone all-in to madness. The risk of holding bonds has increased dramatically, due to the dramatic increase in deficit spending. But while the risk has gone up, the return has dropped dramatically. The 10-year Treasury pays a mere 1%—while the Fed is promising 2% annual debasement or more.
Who wouldn’t want to own gold and silver under these conditions?
A subtle argument for the gold standard is that people do not dispose of their gold recklessly, the way they sometimes do with paper-falling-fast.
There are many perversities of the regime of irredeemable currency. The least of these is: rising consumer prices. We are seeing a greater one now: a failing business that is so overpriced that it attracts massive short-selling. Which attracts massive buying to make money squeezing the shorts. All of this betting is zero-sum at best, transferring capital from one party to another, who receives it as income and spends some of it. So it is not only zero-sum, but a perverse incentive to consume capital.
The world desperately needs to rediscover the gold standard. The path to that is paved with interest on gold, paid in gold
(which is what we do for a living, when we are not burning the midnight oil generating silver charts and writing about the perversities of the equities markets).
2020 Monetary Metals