Precious Metal Market Update, January 25 – January 29


The first month of 2021 is over and what a month January has been. Had many significant events and near the end of the month had one of the most stressful weeks in the markets since the 2008 crash. Many of you may have already heard about the situation in the stock market with Gamestop ($GME), and a few other stocks. If not here’s a brief little summary. Over the past couple of years big Wall Street hedge funds like Melvin Capital and Citadel have all been shorting the dying company Gamestop and a few other companies. A group of Redditors called Wall Street Bets (WSB) noticed that and decided to go against these hedge funds and buy $GME. What’s significant about these Redditors buying these stocks is that it went viral on social media about what they were doing, thus resulting in more people buying the stock and increasing the price of it. The group even got notable billionaire entrepreneurs like Elon Musk, Mark Cuban, and others supporting them. This has put the hedge funds in a compromised position as they were forced to buy back shares to cover the billions in losses they experienced. This is what we call a ‘short squeeze’. Not only were retail traders buying them, but these same hedge funds that were shorting the stock had to begin buying the stock too, thus resulting in a massive increase in price and a lot of chatter about manipulation in the markets. Manipulation news came mainly on Thursday when big stock brokers like Robinhood and TD Ameritrade halted the buying of these stocks and only allowed people to sell, giving the hedge funds an opportunity to short the stock with no buyers and give them a chance for recovery. So what does this all mean for the precious metals market? Well, on Friday word got out that the group with now, nearly 8 million members are potentially targeting Silver next. Thus resulting in a significant increase in demand for Silver and consequently Gold as well. The current state of the markets are very volatile, if WSB does go through with this Silver pump it could leave a massive impact on the global economy as we know it.

The week began with investors and traders more focused on the US equity markets as companies prepared their earnings reports. Gold prices were not very volatile and closed at $1855 (USD/Oz) to start off the week.

Midweek there was more action in the stock markets with retail traders rushing to $GME to make some gains. Many investors liquidated their positions in Gold and other stocks for the Reddit-Gamestop frenzy. Thus, Gold closed at $1840 (USD/Oz) on Wednesday.

Near the end of the week, Gold was extremely volatile, reaching highs of $1875 (USD/Oz) before the stock market opened on Friday. Many believe this spike occurred as a result of potential market manipulation from brokers, hedge funds, and market makers. Gold prices later plummeted as a result of the money flowing to the markets when it opened. Gold ended the week at $1848 (USD/Oz).