Silver 'short squeeze': Trading and operations update, 1st Feb 2021

This trading update was posted and highlighted for all BullionVault users and visitors to read as the #silversqueeze movement on social media sent prices soaring amid the heaviest new interest on record.

The pop in silver prices came as fast as it went, and New Year 2021's surge in demand, most clearly for the giant iShares SLV silver ETF, was reversed within 5 months.

I am the founder of BullionVault.  A few words may be necessary in the context of the current week, at the start of which a rumour is circulating on social media that a short squeeze situation is developing in silver. 

On the social media site where this silver short squeeze story has been mentioned, BullionVault has been referenced as one of the best places to invest in silver, and we have seen an enormous increase in customer interest.

Shorting is impossible on BullionVault. Our system excludes both short selling and silver borrowing.  But of course our prices reflect what is happening in the wider marketplace, so IF silver shorts are being squeezed elsewhere, and prices generally rise, the price at BullionVault will rise with it.  And when silver prices fall elsewhere they will fall on BullionVault too.

Everyone is very welcome to try precious metal investing via BullionVault, but I would like to share some important points with our very welcome new customers.

  1. BullionVault is organized for levels of business which are normal in its marketplace.  Our technology can handle at least twenty times normal volumes, but our customer service staff cannot.  Fortunately most people find ours is a simple system to understand and use.  We also give you a few grams of silver to experiment with, so that you can discover how our order board works at our risk and expense, even before sending us any investment money.  Please use the free grams and the online resources to learn how BullionVault works and understand that our customer services team is being stretched this week!
  2. One of the central rules on BullionVault is that you must identify yourself.  It’s not difficult – usually you only need to upload a photographic id, and a copy of the header of your bank statement.  Please don’t start to deal with us if you are not prepared to do this, as it will only create bad feeling in the future.  We cannot pay money back to people who won’t identify themselves.
  3. I must also warn everyone to keep their heads.  Short sellers are not stupid.  They will happily close any silver short they have by 7.05am as the story breaks, and they will then actively promote the story to push the prices up to unsustainable levels.  Then they will short it again, which could mean your losses incurred as prices fall would pay their profits!  It may well be the case that the ‘short squeeze coming on silver’ story was in fact put out there by a professional who is not short – yet – but who thinks this is a good opportunity to force silver to an unsustainable premium, which is what short sellers always look for. My guess is that professionals ‘out there’ in the wider commodity markets are rubbing their hands in glee as private money comes into the silver market thinking it is giving the professionals a bloody nose.  They believe it will end up the other way around, and they are usually right!
  4. It is much harder to sustain a short squeeze in silver than in a small number of issued shares in a single company.  In practical terms silver stock is almost unlimited.  There will be many potential lenders of silver who given higher lending rates will happily finance well capitalized professional silver shorts, so the shorts will not feel the squeeze anything like they do in a shorted stock.
  5. BullionVault will be neutral while this story runs.  We never advise on when to buy or sell.  We will not be increasing or decreasing our very modest silver position.  We will simply continue trying to be the best place for people to buy and store precious metals, if that is what they choose to do.

Paul Tustain
Founder & Chairman