When silver prices hit a three-decade high last week, David Zornetsky decided to do some buying. Searching for a job, the 31-year old in Beacon, N.Y., hoped to use gains from silver to finance a move to New York City and to pay down student loans. "I had been hearing that silver could go up to $150 an ounce this year," says Mr. Zornetsky.
Instead, silver has suffered its worst one-week drubbing since 1980, when an infamous alleged attempt by Texas's Hunt brothers to corner the silver market came undone...
"I don't understand," says Mr. Zornetsky, whose silver investment fell about 25%. "Silver is supposed to do very well this year."
No, this isn't a gloat. I feel bad for this guy. I felt bad for people who got their houses foreclosed too, provided they didn't commit fraud. Yeah, sure, he was dumb. But he had lots of help.
Day traders, or individuals who quickly buy and sell stocks, began to focus on silver, much as they did with Internet stocks in the late 1990s. A majority of the 350 individual traders hosted by T3 Trading Group in New York began buying and selling silver, rather than stocks.
"It's been 1999 all over again," says Evan Lazarus, a 35-year old trader who manages T3 Trading. In April, Mr. Lazarus shifted his own trading to leveraged exchange-traded funds, or those that rise or fall in price twice or three times the move of silver. "Silver is the new stock market."
Day trader Evan Lazarus invested heavily in silver exchange-traded funds, calling silver 'the new stock market.'
Many individuals piled into such funds. Over a three-week period last month, assets at a half-dozen silver ETFs soared about $4 billion, or more than 20%.
Newsletter writers helped fuel the market's surge. "It is obvious to anyone with any ability to think, that precious metals are a must investment!" said longtime silver backer David Morgan, whose newsletter has 1,000 subscribers and thousands more who read email alerts. The note came after Standard & Poor's warned of a possible downgrade of the U.S.'s credit rating. "Where else can anyone invest for capital preservation outside of precious metals?"
These little retrospectives are wonderful, but where was the Wall Street Journal when this was happening? "No One Could Have Seen It Coming" hasn't prevented an Oscar-winning motion picture from calling for people to go to prison and the entire economics establishment to be forcibly reformed to separate it from Wall Street influence because housing tanked.
Mind you, with a few exceptions that's all pretty silly. Nevertheless, supposedly the government loves Wall Street and hates precious metals. Where's the Congressional investigation? Why aren't the vultures circling? Curious.
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