(BEWARE) All Eyes on Silver

Headlines this week were dominated by manic retail investing inspired by the WallStreetBets (WSB) subreddit.

I can’t believe how many text messages I’ve received in the past week regarding Reddit and the GameStop and AMC short squeezes.

If you need a primer of what happened there and how it started, you can watch my video explanation here.

Recently, a few Twitter users created a silver version of the Reddit post, which got up-voted (ranked higher so the community could see it) to the point that it became major news next to the GameStop post.

With that, it has come a major spike in interest for all things silver – miners and physical especially. Most dealers are telling me that they are out of stock.

And the Vancouver bullion exchange which is on the main floor of our office building had a lineup down the block like it was an Apple store during iPhone launch day.

This is truly rare.

• But it does not mean that silver is about to shoot up to $100.

It’s a textbook example of a crowd experiencing FOMO with a major injection.

Two Psychological Enemies of Every Trader

The Only Way Out of the Death Trap

I’ve said the U.S. is caught in a debt death trap. Monetary policy won’t get us out because the velocity of money, the rate at which money changes hands, is dropping.

Printing more money alone will not change that.

Fiscal policy won’t work either because of high debt ratios. At current debt-to-GDP ratios, each additional dollar spent yields less than a dollar of growth. But because it must be borrowed, it does add a dollar to the debt. Debt becomes an actual drag on growth.

The ratio gets higher, and the situation grows more desperate. The economy barely grows at all while the debt mounts. You basically become Japan.

The national debt is $27.8 trillion. A $27.8 trillion debt would not be an issue if we had a $50 trillion economy.

But we don’t have a $50 trillion economy. We have about a $21 trillion economy, which means our debt is bigger than our economy.

How to profit from the “Dogs of the Dow”… with a twist

Some slogans are so catchy, they need to be trademarked. 

That’s what happened with Apple’s “There’s an app for that” phrase. 

Apple coined it to promote its app store… and the phrase was so successful the company trademarked it.  

But I can’t help but think of this slogan every time I write about ETFs… 

That’s because these days, there’s an ETF—or exchange-traded fund—for almost everything. 

There are index ETFs… inverse ETFs… sector ETFs… country ETFs… bond ETFs… commodity ETFs… income ETFs… volatility ETFs… and even pot ETFs. 

If you’d rather not follow an established index but invest in an active strategy, there is—or will be—an ETF for that, too. 

Many actively managed ETFs, such as the ones managed by ARK or SoFi, invest in innovation, from fintech and genomic stocks (ARK) to the gig economy (SoFi). 

The Stock Market Is Broken, Now for All to See

The historic short squeeze, engineered by a bunch of deeply cynical small traders, exposed just how rigged the market has been.

By Wolf Richter. This is the transcript of my podcast last Sunday, THE WOLF STREET REPORT.

It has finally blown into the open for all to see. The stock market has been broken for a while, for a long time, actually. The idea that the stock market is where price discovery takes place on a rational transparent basis, with ups and downs, and some amount of chaos, but free of rampant manipulations – that idea has now totally imploded.

What has been visible for a long time but now blew into the open is just how manipulated the market is, by all sides, how overleveraged the big players are because the Fed encouraged them to, and how enormous the risks are, and how crazy the trading strategies are.

A historic drop in uptrends

Earlier this week, there were some dangerous signs underlying stocks' internal participation. Despite major indexes hitting new highs, some shorter-term breadth measures were showing rare and mostly troubling lags.

When stocks tumbled on Wednesday, the overwhelming number of declining issues pushed the McClellan Oscillator further below zero, to the point where it's already suggesting oversold conditions. 

There was also a dramatic drop in the percentage of members in the S&P 500 holding above their 50-day moving averages. It plunged more than 20% on Wednesday alone, one of the largest single-day drops in medium-term trends in years. Even so, well over 75% of stocks are still holding long-term uptrends, trading above their 200-day moving averages. 

Asymmetric Investing Can Help You Make Life-Changing Gains

A lot of you know my story. I came to America with $150 in my pocket.

I had no college degree. No financial expertise. I’m only here today because a single hiring manager at Lehman Brothers believed in me enough to give me a shot at a career on Wall Street.

That one shot was everything for me… and for my family.

And that’s why I became a newsletter editor… because I want to give you the same shot I had to achieve financial freedom.

Today, I want to show you how I came to America with just $150 and became a multimillionaire.

First, I had to set a goal for myself. I had to figure out my “Freedom Number.”

I asked myself, “What is the life I want to lead? Whose lives do I want to impact? How much money would it take for me to get the freedom I’ve always wanted?”

In other words, “How much money do I need to do what I want… with who I want… whenever and wherever I want?”

When you answer those questions, you’ll have your Freedom Number.

“Sir, This is a Casino” – Shorts and What’s Next

There’s a good chance you’ve heard of the website Reddit.

It’s an online forum where users can join communities based on their interests, like sports, video gaming, gardening… or even investing.

And one of these investing communities on Reddit has blown up in a big way:

Named “WallStreetBets”, this Reddit community is not a source of sage financial wisdom.

It’s notorious for its “YOLO bets”, such as buying out-of-the-money call options days before expiry in the hopes of hitting it big.

WallStreetBets was once the haunt of investment industry professionals looking for a place to relax and joke with like-minded people.

For a time, even personas like the currently imprisoned former hedge fund manager Martin Shkreli would visit to shoot the breeze.

Ethereum will become the main asset for investors in 2021

During the second half of 2020, we saw a growing interest in cryptocurrencies from institutional investors and big capital. However, all the attention of the whales, as well as all the attention of the public, was fixed on Bitcoin (BTC). Today, we will look at why Ether (ETH) is a more attractive asset and why this cryptocurrency should become the “first cryptocurrency” for every investor.

Let's start with the numbers: ETH’s growth since its March 2020 low after the coronavirus-induced market crash has been 1,200%, whereas BTC has only grown around 700%. ETH’s growth since its March 2020 low after the coronavirus-induced market crash has been 1,200%, whereas BTC has only grown around 700%. Of course, against the backdrop of record highs for Bitcoin, whose price reached $ 40,000, the rise of Ether to $1,400 does not seem so impressive. Moreover, the market capitalization of ETH is five times less than the volume of the BTC market. But what is more important for an investor: nice numbers and records of an asset from a portfolio or high income?

How to Survive a Silver-Gold Sucker Punch

Anyone who owns precious metals, mining shares or metals' ETFs knows the drill.

First, gold and silver begin to establish an uptrend on the charts. Analysts (like us) start writing about how prices are getting ready to make an upside run.

Then "out of nowhere" thousands of highly margined futures contracts hit the market on the short side, "re-painting" the charts, sending terror into the hearts of stackers and those who believe in "honest money."

The reality is that honest money is being manipulated for personal gain by dishonest traders, enabled by "regulators" who, to put it charitably, look the other way.

It can be disheartening. It can make you feel helpless.

And worse, it can knock you off what David Morgan, Doug Casey, and others believe is destined to become the biggest precious metals and mining stock bull run of our lifetimes.

But you can get back up again and persevere on the path to the Winners' Table.

Years ago, when I was moving through the Dan ranks in martial arts' study with my revered Sensei (who unexpectedly passed away last December, ending – at least on this plane – our 33-year relationship), I was given an assignment.

This Isn't Just Another 'Hyper-Charged Market Fad'

We all thought Shantanu Narayen was crazy...

My clients... my former employer... industry pundits... competitors... Wall Street... Everybody.

Some analysts believed Narayen – software titan Adobe's (ADBE) CEO – was making the most boneheaded blunder in Silicon Valley history. I am not ashamed to admit that I thought he had lost his mind.

It was May 6, 2013.

Adobe was the dominant name in publishing software, with $4 billion in revenue. Its products ranged from the ubiquitous Acrobat document creator and reader... to print and digital publishing tools like Photoshop, Illustrator, InDesign, and Dreamweaver... to computer-animation tools like Animate... and much more.

But its leaders prepared to make a radical change... They wanted to revolutionize what everyone on Wall Street seemed to believe was a highly successful business model.

Did you buy these 5 tech stocks yet?

Moderna (MRNA)

On January 27, I addressed the growing coronavirus scare…  and advised readers to pay attention to Moderna, a recent IPO with promising technology… and a lot to prove. 

Despite being one of the largest biotech IPOs on record, relatively few people had ever heard of it. 

Now, it’s a household name. 

Five weeks ago, on December 18, Moderna’s COVID-19 vaccine was granted emergency approval by the Food and Drug Administration (FDA). It was the second vaccine to receive such approval, only after the Pfizer-BioNTech vaccine, approved a week earlier. 

The vaccine requires two shots just like Pfizer’s, but it has one significant advantage: it doesn’t require ultra-cold temperatures for storage. 

Investors Are Moving Cash From Sidelines to Cryptos

While the world changes around us, human nature remains the same.

Unusual events lead to fear and uncertainty. But that fear and uncertainty also leads to predictable outcomes.

In the week after the 9/11 terrorist attacks, investors sold $1.4 trillion worth of stocks. A lot of consumers stopped flying. Airline traffic dropped by over 30%. People just stopped spending like before. And cash savings hit record levels.

That’s human nature. In times of uncertainty, we hunker down and prepare for the worst.

One of the ways this preparation manifests itself is through savings. In other words, cash on the sidelines.

Time and time again we have seen cash build up during uncertain times. In fact, we’re living in one of those times again.

The question is, where is it going? And can we profit? I’ll tell you below.

Biden Will Face New Depression

Economic growth or decline is the result of factors that are larger than any one administration or any one set of policies. Of course, specific policies such as tax changes or regulatory initiatives can help or hurt the economy depending on how they are designed, but they will generally not change the macro-momentum.

A tax increase may be a headwind for growth, but it will not stop a strong economy in its tracks. Likewise, a tax cut or extended unemployment benefits may be a boost for a weak economy, but they will not end a recession single-handedly.

Growth and recession are driven by larger events such as demographics, globalization, war, inflation, deflation and, yes, pandemic. Large changes in fiscal or monetary policy are the only policies that may or may not move the needle.

The recession that began in February 2020 most likely ended in July. There has been no official declaration to that effect from the National Bureau of Economic Research (NBER), the private but widely recognized arbiter of business cycles.

Bond Market Smells a Rat: 10-Year Treasury Yield Hit 1.04%, Highest since March. 30-Year 1.81%, Highest since February. Mortgage Rates Jumped

By Wolf Richter for WOLF STREET.

The 10-year Treasury yield jumped 8 basis points today and settled at 1.04%, the highest since the wild panic days in mid-March 2020. As the yield rises, the price of that bond falls. This yield has now exactly doubled from the historic low of 0.52% on August 4, when folks were still betting that the 10-year Treasury yield drop below zero:

The 30-year yield jumped 11 basis points today to 1.81%, the highest since February 26. On March 3, as all heck was breaking loose, the yield had briefly plunged below 1% for the first time ever, and days later it was back at nearly 1.8%, in some wild and volatile panic trading. But this time, the upward trend started on August 4 and has been systematic: