{"id":74630,"date":"2021-02-03T12:00:00","date_gmt":"2021-02-03T17:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=74630"},"modified":"2022-11-21T09:47:03","modified_gmt":"2022-11-21T14:47:03","slug":"reddit-investors-who-played-gamestop-are-now-upvoting-silver","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/reddit-investors-who-played-gamestop-are-now-upvoting-silver\/","title":{"rendered":"Reddit Investors Who Played GameStop Are Now Upvoting Silver"},"content":{"rendered":"\n<p>Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer\u2019s tagline: \u201cPower to the players.\u201d<\/p>\n\n\n\n<p>The same slogan could just as easily be the rallying cry for the millions of millennial and Gen Z Reddit-users who took to Robinhood last week to drive up the share price of the beloved yet struggling GameStop.<\/p>\n\n\n\n<p>(Fun fact: Ross Perot was one of the earliest seed investors in GameStop\u2019s predecessor, Babbage\u2019s, which first opened its doors in Dallas, Texas, in 1984.)<\/p>\n\n\n\n<p>By now you\u2019ve likely heard the full story. But just in case: A number of hedge funds, including Melvin Capital and Maplelane Capital, took out short positions in GameStop, whose sales were lagging even before the pandemic killed foot traffic. In response, anti-Wall Street organizers on Reddit urged readers to buy GameStop options en masse to catapult its shares \u201cto the moon.\u201d This in turn forced Melvin and others to buy GameStop shares at much higher prices to cover their positions, leading to multibillion-dollar losses. According to reporting by the Wall Street Journal, Melvin&nbsp;<a href=\"https:\/\/www.wsj.com\/articles\/melvin-capital-lost-53-in-january-hurt-by-gamestop-and-other-bets-11612103117#:~:text=Melvin%20Capital%20Lost%2053%25%20in,GameStop%20and%20Other%20Bets%20%2D%20WSJ\">lost more than half on its investments in January.<\/a><\/p>\n\n\n\n<p>GameStop, meanwhile, surged from around $19 a share to $325\u2014a more-than 1,600% increase. The stock traded a head-spinning $100 billion worth of shares last week, more than Apple and Amazon,&nbsp;<a href=\"https:\/\/twitter.com\/EricBalchunas\/status\/1355260172642512898\">according to Bloomberg\u2019s Eric Balchunas.<\/a><\/p>\n\n\n\n<p>To traders who genuinely care about the company\u2019s survival, I would suggest they consider supporting it by spending their money there this weekend.<\/p>\n\n\n\n<p>The Reddit-fueled rally has drastically impacted price discovery in not just GameStop but other underdog stocks as well. Shares of movie theater operator AMC Entertainment, home goods retailer Bed Bath &amp; Beyond, BlackBerry and Tootsie Roll Industries have also popped. Even Blockbuster\u2019s liquidation holding company saw surreal levels of trading, its daily volume jumping from zero just a month ago to nearly 24 million shares on Thursday.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"695\" height=\"342\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-12.png\" alt=\"blockbuster stock\" class=\"wp-image-74631 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-12.png 695w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-12-300x148.png 300w\" data-sizes=\"(max-width: 695px) 100vw, 695px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 695px; aspect-ratio: 695\/342;\" \/><\/figure>\n\n\n\n<p>Today, the price of silver also surged on the back of Reddit forums, touching an eight-year high of $30 an ounce in intraday trading.<\/p>\n\n\n\n<p>Gil Scott-Heron, considered by many to be the first rap artist, informed us back in 1971 that \u201cThe Revolution Will Not Be Televised.\u201d&nbsp;<\/p>\n\n\n\n<p>That may be so, but it will be tweeted, shared on Instagram, upvoted on Reddit and traded on commission-free Robinhood using decentralized Bitcoin and Ethereum. \u201cPower to the players\u201d indeed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-in-support-of-democratizing-capital-markets\">In Support of Democratizing Capital Markets<\/h2>\n\n\n\n<p>No matter where your opinion falls in all of this, you can\u2019t deny that it\u2019s historic. To my knowledge, nothing like this has ever happened before in capital markets, where millions of small traders, many of them using their $600 stimulus checks, worked in tandem to cripple wealthy institutional investors, leveraging their very own trading strategies against them.<\/p>\n\n\n\n<p>Metro-Goldwyn-Mayer (MGM), in fact, has&nbsp;<a href=\"https:\/\/deadline.com\/2021\/01\/mgm-ben-mezrichs-the-antisocial-network-wall-street-1234684378\/\">reportedly acquired the film rights<\/a>&nbsp;to an as-yet unpublished book about the Reddit-GameStop saga. The book\u2019s working title?&nbsp;<em>The Antisocial Network.<\/em><\/p>\n\n\n\n<p>In the process, a number of GameStop traders have made life-changing amounts of money.<\/p>\n\n\n\n<p>Let me be very clear: I\u2019m in favor of Robinhood\u2019s mission to democratize capital markets and finance, but like democracy itself, things can sometimes get messy. What the Redditors are doing is not investing. This isn\u2019t the same as&nbsp;<a href=\"https:\/\/www.usfunds.com\/investor-library\/frank-talk\/how-robinhood-investors-beat-buffett-at-his-own-game\/\">Robinhooders buying airline stocks last May<\/a>&nbsp;after Warren Buffett dumped his positions in the big four carriers.<\/p>\n\n\n\n<p>It isn\u2019t even speculation. It\u2019s activism\u2014think of it as a type of anti-Wall Street \u201cArab Spring\u201d\u2014and I fear that some young people may get hurt when the bottom falls out.<\/p>\n\n\n\n<p>Robinhood clearly felt the same when it halted trading in some of the heavily shorted stocks (and, on Friday, as many as 50 other stocks). The online broker, whose tagline is \u201cInvesting for Everyone,\u201d tried to clarify its decision in an email last week, saying the temporary restriction \u201cwas not made on the direction of any market maker we route to or other market participants.\u201d<\/p>\n\n\n\n<p>Robinhood also emphasized its longstanding mission to open the capital markets up to a greater share of people, including younger and nontraditional investors: <em>The past year in particular has shown us that the financial markets are for everyone\u2014not just institutional investors and hedge funds&#8230; Democratizing finance for all means giving more people access, not less.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Dalio: Bitcoin Is \u201cOne Hell of an Invention\u201d<\/h2>\n\n\n\n<p>That brings me to Bitcoin, Ethereum and the crypto ecosystem in general, which is likewise helping to democratize finance. When you use a card to pay for your Starbucks, there\u2019s a third party standing between you and the transaction. With Bitcoin and Ethereum, payments are peer-to-peer, open and free to move across borders.<\/p>\n\n\n\n<p>For this reason and more, Ray Dalio last week called Bitcoin \u201cone hell of an invention.\u201d<\/p>\n\n\n\n<p>In a&nbsp;<a href=\"https:\/\/www.bridgewater.com\/research-and-insights\/ray-dalio-what-i-think-of-bitcoin\">blog post<\/a>&nbsp;dated January 28, the Bridgewater founder wrote that it\u2019s an \u201camazing accomplishment\u201d that Bitcoin has been \u201crapidly gaining popularity as both a type of money and a storehold of wealth.\u201d He added that, to him, Bitcoin looks like an attractive long-term option that he could one day put money in.<\/p>\n\n\n\n<p>Dalio\u2019s comment, I believe, underscores the reality that cryptos are rapidly going mainstream\u2014as an investment, as stores of value and as currencies. It\u2019s no longer just speculators who are participating, but well-known, highly respected investors and organizations.<\/p>\n\n\n\n<p>The week before last, in fact, inflows into cryptocurrency funds and products&nbsp;<a href=\"https:\/\/www.reuters.com\/article\/us-crypto-currency-flows\/bitcoin-crypto-inflows-hit-record-last-week-coinshares-idUSKBN29U2LA?il=0\">hit a new record of $1.31 billion,<\/a>&nbsp;according to CoinShares. So far this year, Bitcoin has seen average daily trading volume of $12.3 billion, up significantly from $2.2 billion last year.<\/p>\n\n\n\n<p>Another sign that Bitcoin is growing in popularity: The number of Bitcoin wallets that contained a positive balance reached a new record high in 2020, according to&nbsp;<a href=\"https:\/\/primebroker.coinbase.com\/2020-in-review\">Coinbase\u2019s 2020 in Review.<\/a>&nbsp;An estimated 33.2 million wallets held Bitcoin, an increase of 16.8% from the previous year.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"690\" height=\"354\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-13.png\" alt=\"number of bitcoin holders\" class=\"wp-image-74632 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-13.png 690w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-13-300x154.png 300w\" data-sizes=\"(max-width: 690px) 100vw, 690px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 690px; aspect-ratio: 690\/354;\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">The Rise of DeFi, a Competitor to Traditional Financial Services<\/h2>\n\n\n\n<p>Decentralized finance (DeFi) also continued to grow in 2020. In short, DeFi has the potential to completely upend the traditional financial services industry by providing \u201cglobal, programmatic, decentralized, 24\/7\/365 markets\u201d for services as various as taking out loans, investing in derivatives, trading assets and buying insurance contracts. For the first time, financial product development has been put \u201cdirectly in the hands of engineers, who no longer need to work at a bank and \u2018ask permission\u2019 to create products.\u201d<\/p>\n\n\n\n<p>According to Coinbase, there were 1.2 million DeFi users around the world taking advantage of these open-source systems. <\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"690\" height=\"304\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-14.png\" alt=\"Defi users\" class=\"wp-image-74634 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-14.png 690w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-14-300x132.png 300w\" data-sizes=\"(max-width: 690px) 100vw, 690px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 690px; aspect-ratio: 690\/304;\" \/><\/figure>\n\n\n\n<p>I think one of the biggest signs that open-source technology is giving traditional finance a run for its money is that, today, a single Bitcoin is enough to purchase between 100 and 150 shares&nbsp;<em>each&nbsp;<\/em>of the big four U.S. banks. Compare that to five years ago, when one coin could only buy you about one share each.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"662\" height=\"348\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-15.png\" alt=\"bitcoin shares value 2021\" class=\"wp-image-74635 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-15.png 662w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-15-300x158.png 300w\" data-sizes=\"(max-width: 662px) 100vw, 662px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 662px; aspect-ratio: 662\/348;\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">We Were Early in the Crypto Ecosystem<\/h2>\n\n\n\n<p>Having said all that, I couldn\u2019t be prouder to have helped bring&nbsp;<a href=\"https:\/\/hiveblockchain.com\/\">HIVE Blockchain Technologies<\/a>&nbsp;to market more than three years ago. It remains the only crypto miner that mines both Bitcoin and Ethereum.<\/p>\n\n\n\n<p>Today, I\u2019m pleased to say that HIVE ranked number four on the&nbsp;<a href=\"https:\/\/www.prnewswire.com\/news-releases\/otc-markets-group-announces-the-2021-otcqx-best-50-301216697.html\">2021 OTCQX Best 50,<\/a>&nbsp;a ranking of top performing companies on the OTCQX Best Market based on 2020 total return and average daily dollar volume growth.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted on February 1, 2021 &#8211; <a href=\"https:\/\/www.usfunds.com\/investor-library\/frank-talk\/reddit-investors-played-gamestop-and-now-upvoting-silver\/#.YBqnOug3mUk\">Reddit Investors Who Played GameStop Are Now Upvoting Silver<\/a><\/p>\n\n\n\n<p><strong>Please note: The Frank Talk articles listed contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate&nbsp;fund performance&nbsp;page.<\/strong><\/p>\n\n\n\n<p>Frank Holmes has been appointed non-executive chairman of the Board of Directors of HIVE Blockchain Technologies. Mr. Holmes owns shares of HIVE while U.S. Global Investors owns convertible securities. Effective 8\/31\/2018, Frank Holmes serves as the interim executive chairman of HIVE.<\/p>\n\n\n\n<p>Some links above may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.<\/p>\n\n\n\n<p>Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12\/31\/2020): Amazon.com Inc., Apple Inc., Starbucks Corp.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Reddit-fueled rally has drastically impacted price discovery in not just GameStop but other underdog stocks as well. Shares of movie theater operator AMC Entertainment, home goods retailer Bed Bath &#038; Beyond, BlackBerry and Tootsie Roll Industries have also popped. <\/p>\n","protected":false},"author":36,"featured_media":74631,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,16,17,6,19,8,9,22,26,3],"tags":[410,3351,678],"contributors-categories":[13633],"class_list":{"0":"post-74630","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-commodities","8":"category-forex","9":"category-futures","10":"category-north-america","11":"category-options","12":"category-region","13":"category-securities","14":"category-stocks","15":"category-text-articles","16":"category-traders-insight","17":"tag-bitcoin","18":"tag-gamestop","19":"tag-silver","20":"contributors-categories-us-global-investors"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO 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content=\"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/reddit-investors-who-played-gamestop-are-now-upvoting-silver\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:published_time\" content=\"2021-02-03T17:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-11-21T14:47:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/02\/image-12.png\" \/>\n\t<meta property=\"og:image:width\" content=\"695\" \/>\n\t<meta property=\"og:image:height\" content=\"342\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Frank Holmes\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Frank Holmes\" \/>\n\t<meta name=\"twitter:label2\" 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