GameStop, short-sellers, Reddit rebels and Wall Street’s wonky plumbing
What was the furore over US retailer GameStop really about? Is silver the next big social media-driven trade? And what does any of this mean for sensible long-term investors? John Stepek tries to unravel the story.


For most MoneyWeek readers, the Reddit saga began as an intriguing distraction, but not something with a huge impact – not many of us are invested in struggling US retail chains. However, then silver came onto the radar of the WallStreetBets gang. As a result, it shot up by more than 10% to over $30 an ounce earlier this week, before suffering a sharp drop the next day. So what should you be doing if you own it?
Our view is quite simple: write it off as a blip. Silver is volatile at the best of times. While the Reddit story resurrected many of the long-running conspiracy theories surrounding silver (mainly to do with investment banks manipulating the price, which is not entirely without basis in fact, but not something you can do anything about), anyone who owns silver now should be doing so because they believe in the bullish macroeconomic case for owning it, not because they expect an imminent short squeeze.
As Eoin Treacy notes on fullertreacymoney.com, “the big difference between silver and GameStop is that there is a fundamental reason for being interested in silver. The world is awash with liquidity and governments are intent on achieving their inflation goals come what may”. So it’s worth having some exposure. But treat it as a speculative part of your portfolio. While gold broadly hangs onto its buying power over the very long term, it still endures long periods of underperformance, and silver is far worse on this front – it still hasn’t surpassed its 1980 and 2011 peaks in nominal terms, let alone adjusted for inflation. So in terms of asset allocation, view silver as being part of your equity allocation – same as your gold mining stocks – rather than part of your “buy and HODL” physical gold stash.
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John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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