Wrapup 1: GameStop slides, silver spree stalls as retail traders run out of road

Investigator Silver

02/02/2021 09:36

* GME down 30% in Frankfurt, down 23% in U.S. pre-market
    * Silver falls 8% from Monday's eight-year high
    * Robinhood raises $3.4 bln from investors in a week

    By Tom Westbrook
    SINGAPORE, Feb 2 (Reuters) - GameStop shares slid in
Frankfurt and U.S. pre-market trade on Tuesday and a silver
buying spree led by small investors subsided as retail-driven
mania for shorted assets started to show signs of fizzling out.
    GameStop's Frankfurt-listed shares  GMEa.F  were down 30%
from Monday's close at 143 euros ($172.72) in early trade on
Tuesday, after the firm's stock closed at $225 in U.S. markets.
It fell 23% to $173 in pre-market U.S. trade. 
    Spot silver prices  XAG=  fell more than 4% to $27.66 an
ounce to sit some 8% beneath the eight-year high made on Monday,
when retail traders bought coins and piled into silver funds to
set prices spiking. 
    Analysts said the silver pullback may show the limits of
small investors' impact in a large market, while posts on the
popular Reddit forum WallStreetBets expressed concern that
silver buying could cost traders their grip on some stocks.
    The social media-driven trading frenzy "could be slowly
ending", said OANDA market analyst Edward Moya. "Like all good
rollercoaster rides, they all come to an end."
    Retail buyers' darling GameStop Corp  GME.N  dropped 30.8%
on Monday, though it remains about 1,000% higher than a couple
of weeks ago, before an organised band of small buyers piled in
and forced a "squeeze" which required big funds to close short
positions by buying shares at very high prices.
    Other shares caught up in a frenzy that has battered
short-sellers extended their advance, including BlackBerry Ltd
 BB.N .  urn:newsml:reuters.com:*:nL1N2K60M1
    Online broker Robinhood, on whose platform much of the
buying and selling has taken place, also raised another $2.4
billion from shareholders just days after investors pumped in $1
billion.  urn:newsml:reuters.com:*:nL4N2K74E1
    "It certainly feels like there's some evidence of peak
retail stall, but hard to gauge since they're still sitting on
decent profits," said Mirabaud's London-based equity sales
trader Mark Taylor.
    "With volumes in all the hot stocks collapsing, silver
attack met by margin, Robinhood having to seek fresh collateral
at a rampant speed, the signals that the retail mania could
unravel rapidly are aligning."
    Small traders' involvement in financial markets has grown
sharply over the past year as lockdowns, volatility and stimulus
cheques have combined to drive an investment surge that has
turbocharged a huge rally in global equities since last March.
    Day-trading mania has boosted the price of assets ranging
from cryptocurrencies to new stock market listings. In London a
sign of still-strong demand came from online greeting-card
retailer Moonpig  MOONM.L , which leapt 25% on debut on Tuesday.
 urn:newsml:reuters.com:*:nL8N2K81EU
    The showdown between short-selling hedge funds and the
small-time day traders also has also drawn scrutiny from
financial regulators, lawmakers and the White House, concerned
about possible market manipulation.
    Robinhood continued to roll back trading curbs on Monday,
raising trading limits on GameStop to 20 shares from four.
    Weak prices in pre-market trade may serve as a guide to
where the phenomenon is headed next, although broader markets
appeared to be moving on from jitters the frenzied buying had
triggered and equities in Asia rose broadly on stimulus hopes.
 MKTS/GLOB 
    The number of shorted GameStop shares has fallen by more
than half in a week, analytics firm S3 Partners said on Monday,
although the videogame retailer remained the sixth-biggest short
by value.  urn:newsml:reuters.com:*:nL1N2K71OC
    "Short-squeeze mania has calmed a bit for this week," said
Chris Brankin, chief executive of broker TD Ameritrade in
Singapore.
    
    QUICKSILVER
    Silver's slumping spot price on Tuesday came even as dealers
reported brisk trade in Asia, albeit below Monday's massive
volumes, suggesting a further squeeze higher might be unlikely. 
  
    A lot of people who were anticipating a GameStop-like rally
in silver "now realize there is not as much buying pressure
pushing it up" as some had thought, said Michael Matousek, head
trader at U.S. Global Investors.  urn:newsml:reuters.com:*:nL4N2K73VH
    An additional drag on prices was an overnight margin hike by
the Chicago Mercantile Exchange, which makes speculative trade
using derivatives products more expensive.  urn:newsml:reuters.com:*:nL1N2K800V
    "Silver is much more liquid compared to stocks, and there
are costs to holding the metal," said Benjamin Yeo, head of
dealing at Phillip Futures in Singapore, where on Monday silver
futures volumes had been surging.
    "In the short term, we can expect more volatility from the
retail buying interest, but do not think it is sustainable."
    The unit price of Australia's ETF Securities' Physical
Silver fund  ETPMAG.AX  fell 1% in Sydney after drawing a record
A$76 million ($58 million) in inflows on Monday. Small silver
miners, which had leapt, also retraced some of their gains.
 urn:newsml:reuters.com:*:nL4N2K75IM
    "It is slowing down a bit," said Gregor Gregersen, founder
of Silver Bullion, a dealer in Singapore, after a wild 24 hours
where he said sales exceeded average monthly levels from 2018
and orders above S$35,000 ($26,300) arrived every three minutes.
    Reddit moderators had on Tuesday removed one of the most
popular posts suggesting buying silver and many WallStreetBets
posts focused on riding out the volatility.
    "WHO IS HOLDING GME WITH ME?" read one top post. "I'M
HOLDING EVEN IF MY PORTFOLIO GOES DOWN TO ZERO," read another.
    ($1 = 0.8280 euros)
    ($1 = 1.3108 Australian dollars)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Europe's 'long the short' trade cools down       urn:newsml:reuters.com:*:nL8N2K73VR
GRAPHIC-Silver prices versus ETF silver holdings    https://tmsnrt.rs/3ctQxxW
GRAPHIC-Comex silver futures prices vs trader short positions   
https://tmsnrt.rs/3t8y6EV
Wall Street gears up for next bout against Reddit traders   
 urn:newsml:reuters.com:*:nL8N2K60NR
TIMELINE-Silver surges to five-month high as GameStop retail
mania spills over         urn:newsml:reuters.com:*:nL1N2K70CI
GRAPHIC-Silver fund inflows surge in January on retail trading
frenzy     urn:newsml:reuters.com:*:nL4N2K73A7
BREAKINGVIEWS-Retail silver punt brings real-world distortions  
  urn:newsml:reuters.com:*:nL8N2K722P
Hedge fund body alarmed by retail investor frenzy 'distortions' 
   urn:newsml:reuters.com:*:nL1N2K711T
EXPLAINER-How retail traders squeezed Wall Street for bets
against GameStop       urn:newsml:reuters.com:*:nL1N2K221Y
ANALYSIS-GameStop saga may provide early test of Biden
administration ethics pledges      urn:newsml:reuters.com:*:nL1N2K334F
ANALYSIS-Reddit is coming for silver. A short squeeze? Unlikely 
   urn:newsml:reuters.com:*:nL4N2K72ZQ
ANALYSIS-To the brink and back on GameStop: Wall Street vs
Reddit     urn:newsml:reuters.com:*:nL1N2K60DM
ANALYSIS-Robinhood and Reddit protected from lawsuits by user
agreement, Congress      urn:newsml:reuters.com:*:nL1N2K60DS
TAKE A LOOK-From Reddit rally to regulatory scrutiny: The retail
trading frenzy     urn:newsml:reuters.com:*:nL4N2K365N
'Gamestonks' or silver? Reddit investors worry about losing
GameStop focus     urn:newsml:reuters.com:*:nL1N2K71M3
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Adinarayan Thyagaraju in London, Sumita Layek and
Swati Verma in Bangalore; Writing by Tom Westbrook; Editing by
Jan Harvey)
 ((tom.westbrook@tr.com; +65 6318 4876;))