Silver broke above $30 US an ounce for the first time since 2013 on Monday, the latest asset to see a pop in a volatile few weeks on markets.
Colin Cieszynski, chief market strategist with SIA Wealth Management in Toronto, said silver has apparently become the next asset to get caught up in the GameStop frenzy.
“The most significant move this morning has been in silver, which was a trending topic in the media and on Reddit over the weekend with a lot of chatter (both for and against) that it could be the next market to become active in the wake of GameStop’s big move last week,” he said.
Spot silver leapt more than 11 per cent in London to $30.03 an ounce and was on track for its biggest one-day rise since 2008, taking gains to about 19 per cent since last Wednesday.
The jump set off a rally in silver-mining stocks from Sydney to London.
The action in silver, following thousands of Reddit posts and hundreds of YouTube videos suggests that a rise in the physical price could hurt large investors with bearish bets, also marks a foray into a much bigger and more liquid market than individual stocks.
Analysts who monitor silver markets say there is more to the story than small investors rushing in.
“The asset is traded by a variety of institutional players and it is very likely that those parties have joined the move to push the metal higher,” wrote Boris Schlossberg of BK Asset Management.
On Twitter, #silversqueeze was trending as investors turned their attention to silver, but some members of the WallStreetBets forum on Reddit insisted this was not their latest strategy. (Dado Ruvic/Reuters)
“I would look at the silver rally the same way as I would the GameStop saga — from the point of view of market stability, for now it’s not an immediate concern, but if we see sharp moves, we could see some deleveraging in markets,” said Antoine Bouvet, a rates strategist at ING.
“This reducing of risk through deleveraging could potentially boost demand for bonds if it is causing excess volatility.”
In the first signs of deleveraging, Goldman Sachs said the amount of position-covering last week by U.S. hedge funds, buying and selling, was the highest since the financial crisis more than a decade ago.
Nevertheless, their market exposure to stocks remains near record levels, the investment bank warned.
Rise of new trading platforms
The rush to silver and GameStop-like stocks has been testing limitations in newer trading platforms and processing venues, frustrating retail traders who are unable to feed their hunger to buy and sell more frequently.
The feverish silver-buying has hit a glitch, with large U.S. broker Apmex warning of processing delays while it secures more bullion. The Money Metals online exchange suspended trade until mid-morning Monday.
Trading volumes in small miners’ stocks in Australia were unprecedented and jumps in some exploration firms, which do not actually produce silver, topped 90 per cent.
Similar hiccups were seen in equities last week. GameStop, AMC and a few other volatile stocks saw temporary buying restrictions in trading apps like Robinhood, as frenzied buying led to trading apps putting on curbs.
“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyze something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.
“This is their big, bold Moby Dick moment.”
Stock in video game retailer GameStop saw huge increases last week as a cadre of retail investors mobilized to buy it up. (Carlo Allegri/Reuters)
Another ‘short squeeze’
The popularity of dabbling in stock markets has grown during the COVID-19 pandemic as volatility, stimulus checks and lockdowns have driven account openings and investment.
The craze hit fever pitch last week when the GameStop pile-on resulted in a “short squeeze,” turning price gains stratospheric as hedge funds with bets against the stock desperately bought it at high prices to close their positions.
Now it is silver’s turn and once again the scale of buying is catching the professionals by surprise.
Online discussions turned to silver late last week as Reddit posts suggested higher prices could hurt banks with large short positions, and that buying easy-to-access exchange-traded silver funds could quickly ramp up the metal’s value.
Retail traders poured a record $39.1 million Cdn into Australian ETF Securities’ Physical Silver fund by the afternoon. A silver ETF in Japan surged 11 per cent.
So far, the Redditors are rolling on. Several of the renegade traders are millionaires on paper and their hedge fund adversaries are nursing their wounds. Melvin Capital, which bet against GameStop, lost 53 per cent on its portfolio in January.
The trading app Robinhood has exploded in popularity this year by offering free trading, fuelling a boom in retail investor activity. (Brendan McDermid/Reuters)
Robinhood, the Redditors’ main broker, has also backed down and lifted some of the buying restrictions it imposed last week, although limits remain on eight companies, including GameStop, AMC Entertainment and BlackBerry.
However, with regulators circling both Robinhood and the Redditors’ forums, the battle is far from over.
“I’ll tell you one thing, [I] absolute guarantee this ends in tears,” said Michael McCarthy, chief market strategist at CMC Markets (Australia). “I just don’t know when.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
