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Reddit silver squeeze is on!

XAG/USD – Daily Candlesticks
Source: GKFX / MT4 (February 1, 2021)

XAG/USD has broken above it January high near $27.90, opening up a possible move beyond $30.
The higher high comes after a bounced from the 61.8% retracement of the rally from September through January as well a re-test of the old down-sloping trendline.
 

TAKEAWAYS


•    Silver targeted for short squeeze by WallStreetBets on Reddit
•    Physical silver supply is reportedly sold out in America
•    Short-squeezed stocks rise again (GME, AMC)
•    USD/JPY breaks higher, hits 2-month high
•    Bitcoin drops under $33,000 from over $38,000 last week
•    Melvin Capital, the hedge fund short GameStop is down 50% in January
•    Dow Jones dropped 600 points on Friday for worst week since October
•    WTI oil trading flat between $52 and $53 per bbl
•    DAY AHEAD: Global manufacturing PMIs
 

GURU WISDOM


“Games are won by players who focus on the playing field –- not by those whose eyes are glued to the scoreboard.” - Warren Buffett 
 

MARKETS


*Daily closing price
↗ EUR/USD    1.2136        (+0.12%)
↘ GBP/USD    1.3702        (-0.12%)
↗ USD/JPY    103.77        (+0.45%)
↘ S&P 500    3855.36    (-1.93%)
↘ Hang Seng    30,159.01    (-0.94%)
↗ Gold        1854.63    (+0.46%)
↗ Oil (Brent)    55.88        (+0.63%)
↘ Bitcoin    33,203        (-3.29%)
 

NEWS

 

Silver targeted


As we mentioned on Friday, the suggestion on WallStreetBets from one user that silver is a ‘one of the most manipulated’ markets prompted gains in the spot price. It turns out that the big spot price gains have been prompted by huge demand for physical silver, whereby many of the biggest wholesalers such as SD Bullion and APMEX are out of short-term supply.  

WallStreetBets traders are targeting SLV, the ticker for an ETF tracking silver. The thesis is that there are a lot of ‘naked shorts’ – meaning people selling silver who do not own any silver. Buying the ETF will mean the ETF will need to hold more physical silver, making even less available to buy. So, if the price moves higher, these traders that are short will need to buy silver back, possibly at progressively higher prices.
 

USD/JPY


The move in precious metals markets come despite signs of dollar-strength as USD/JPY popped higher out of a multi-month falling wedge pattern highlighted by us on several occasions. The dollar has gained as a haven as stock markets had their worst week since October amid the increased trading volatility and concerns over disruptions in the vaccine rollout. 
 

DAY AHEAD 


*Times in GMT
07:00 – Germany Retail Sales (MoM)(Dec) [-2.3 % Exp vs. 1.9 % Prev]
08:55 – Germany Markit Manufacturing PMI(Jan) [57 Exp vs. 57 Prev]
09:30 – UK Markit Manufacturing PMI(Jan) [52.9 Exp vs.     52.9 Prev]
15:00 – US ISM Manufacturing PMI(Jan) [59.5 Exp vs. 60.7 Prev]
 

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