- Title: “Ape like shiny,†but can Reddit’s silver stackers beat the market?
- Date: 9th July 2021
- Summary: WASHINGTON, D.C., UNITED STATES (JULY 07, 2021)(REUTERS) URL OF SILVER BULLION COMPANY 'APMEX' BEING TYPED INTO WEB BROWSER PERSON [OFF SCREEN] BROWSING SILVER COINS ON APMEX SITE
- Embargoed: 23rd July 2021 15:43
- Keywords: Reddit Silver Wall Street Silver WallStreetBets silver prices silver stackers
- Location: VARIOUS
- City: VARIOUS
- Country: USA
- Topics: Commodities Markets,Economic Events,United States
- Reuters ID: LVA004EL5EZIF
- Aspect Ratio: 16:9
- Story Text: Kerry Kraker, 56, has worked in kitchens all his life. Since March he's spent around $100 a week - half his spare cash - on silver coins. He's part of a growing social media movement who say they are buying bars and coins for protection from a coming age of inflation.
Thanks to a community of like minded silver 'stackers' gathering on social-media platform Reddit Inc., Seattle-based Kraker says he also feels empowered.
Inspired by Reddit forum WallStreetBets, some of the 122,000-strong community hope to corner the market and bring down what they say is an unjust banking system.
Market professionals say that is unlikely to succeed - there is plenty of silver, and central bankers in the United States and Europe expect inflation to stay in low single-digits.
But bankers aren't getting through to this group.
"I'm pretty sure that the uppity ups in the banks and the COMEX and the LBMA [London Bullion Market Association] just think we're just a bunch of, you know, street trash and that we're just going to quit… but I don't think that's going to happen," Kraker says.
"There's a little anarchy in it. It's like, OK, we're done with you telling us what we can do and what our money is and what our money isn't. We've decided that this is actual money," he says.
The core of the movement is a Reddit community called Wall Street Silver, formed in January at the time WallStreetBets was marshaling an uprising of ordinary people against the financial elites, through coordinated buying of company shares.
Reuters spoke to more than 20 members, who call themselves "silverbacks" and "apes," have a home page featuring an image of an army of primates on the march from the "Planet of the Apes" movie, and say things like "Ape like shiny." They organize "raids" - days on which everyone buys together.
The group's founder, 24 year-old Ivan Bayoukhi, lives in Alberta, Canada, who says he previously worked in sales.
Bayoukhi, whose parents are from Iraq, says he was inspired by WallStreetBets, and told his father they could do the same thing with silver.
But Bayoukhi says that the key difference between his group and Wall Street Bets is that the silver stackers take the long view.
"Wall Street's Silver isn't just a get-rich-quick scheme," he says. "we're not trying to emulate Wall Street Bets where we just pick a couple of stocks in the market and then just pump and dump them. Nobody is selling silver."
Silver costs around $26 an ounce. Stackers think the price will rise as inflation erodes the value of currencies, demand for silver rises, and supplies run short. Some say that by buying up bars and coins, they can jack up prices by 100% or even 1,000%, to the point where they can call the shots against the so-called bullion banks, the large financial institutions which lead trade in precious metals.
Prices of silver and gold, which are traditionally seen as safe stores of wealth, have risen since 2019: Gold is up around 40% and silver around 70% since then.
The silver stackers are joining millions worldwide who believe currencies are vulnerable - a fear that has grown as governments borrowed and printed money in the pandemic.
35 year-old Markos Polydorou, said he got into silver stacking after losing his job in the music industry during the pandemic, and now has collected 445 ounces.
He says collecting silver has given him a feeling of security in insecure times.
"It's… not about the short-term investment in it that I like, it's just my family having some sort of pirate chest to be able to fall back to its God forbid something happens," he says.
Polydorou, who lives in Niagara Falls, Canada, says the silver stacking movement is about sending a message to the banks and large mints.
"I think that that's a great way to… show that we can't continue on in sort of this this manner any longer and that we the people really do have the power," he says.
Posters on Reddit joined the silver fray on January 27, when posts appeared on WallStreetBets saying that if enough people bought the metal, they could push prices to the moon.
Adding to the impetus was an argument put forward on Reddit that big banks trade huge quantities of paper contracts for silver that they don't have in their possession, keeping prices lower than they should be. In some ways, that's correct.
Contracts representing around 800 million ounces of silver are active in the New York futures market alone - more than twice the amount the exchange says is in its registered vaults, not all of which is available for delivery.
If every professional who owns silver on paper called in their dues at once, there wouldn't be enough metal on hand. The system works because most people with contracts don't want actual metal, which they'd have to pay to store and insure, in large facilities like International Depository Services in Delaware.
After the posts on WallStreetBets, around $3 billion rushed into a fund run by asset managers Blackrock that stores silver for investors. Blackrock said it added more than 100 million ounces of silver to its stockpile in three days. Silver's wholesale price jumped nearly 20%.
There's also truth in Redditors' claims that big players can influence the silver market. One trader tactic is spoofing - sending out fake buy or sell orders to shift prices before completing the real trade.
In 2020, JPMorgan paid $920 million to U.S. authorities to settle charges that its staff sent "hundreds of thousands" of fake orders into precious metals and Treasury markets.
The bank said at the time that the people responsible had left and it had improved its compliance systems.
Wall Street Silver founder Bayoukhi says the system is broken.
"If it's such a small market and the masses start waking up to physical gold and silver, that market will be depleted instantly and that spring will explode," he says. "So, all of these bullion banks to have been charged for manipulating the paper price of silver, it'll be too late. Unless they start changing the rules again, like they always change the rules in history."
But the impact of spoofing lasts only seconds or minutes, said Ross Norman, a London-based former precious metals trader.
The January squeeze lasted three days. Then WallStreetBets returned its focus to stock markets; silver calmed. Since early February, the price of silver has fallen by a dollar.
Undeterred, Wall Street Silver issues a deluge of tips, analysis, memes, photos and encouragement. It is only Reddit's 3,783rd biggest community, but it is frequently in the top 20 for volume of posts per day.
Reddit buyers sit at the end of a fat silver pipeline. Only about a quarter of the 1 billion ounces or so that are produced each year is used to manufacture the bars and coins that most of them are buying, analysts say. Most of the rest is used for jewelry and in industrial applications.
Michael Mesaric, who runs the world's largest gold and silver refiner - Valcambi SA, in Switzerland - says the 1,000 ounce bars of silver used in the wholesale market are plentiful: For small investors to think they can corner the market is "entirely wrong."
Investors will stockpile a lot of silver this year, but less than in 2020, according to consultants Metals Focus. Demand in the West is strong, but in India, one of the biggest silver consuming countries, the pandemic is reducing people's ability to buy, they say.
Silver coins and bars can certainly hold their value. Higher inflation should lift prices, as will rising demand from makers of goods like electronics and solar panels, said Rhona O'Connell, an analyst at traders and brokers StoneX.
But she, and others at companies that trade the metal, think predictions of $1,000 an ounce are out of this world.
Of 39 analysts and traders polled by Reuters in April, only seven thought silver prices would average $30 or more in 2022. The highest average that they forecast was $44.
Redditors are unmoved. Kraker, the restaurant worker, has begun reading obsessively about inflation, money supply and other economic data.
He says unlike some others his goals are limited, but he's enjoying taking part in the big silver game.
"It's like we're just getting poorer and they're just getting richer and they are not explaining why," he says. "And so, yeah, there are some pretty pissed off people. I'm not super pissed off. I'm just, like, fascinated and I want to play."
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