Top Stories This Week: Silver Squeeze Update, Gold Stuck Below US$1,800

Precious Metals
silver squeeze

Catch up and get informed with this week’s content highlights from Charlotte McLeod, our editorial director.

It was another week of downward momentum for the gold price.

The yellow metal started the period above the US$1,800 per ounce mark, but at the time of this writing on Friday (February 26) it was lower, changing hands at about US$1,735.

This time around the metal’s decline has been largely blamed on improved US Treasury yields, as well as better-than-expected economic data out of the US. Despite that positive data, it’s worth noting that Federal Reserve Chair Jerome Powell reiterated this week that the American central bank does not plan to halt its efforts to prop up the economy any time soon.

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved” — Jerome Powell, US Federal Reserve

He also downplayed concerns that President Joe Biden’s proposed US$1.9 trillion stimulus package could cause inflation. The Fed’s inflation goal right now is 2 percent.

Moving over to silver, I got an update on the white metal this week from Nick Barisheff of BMG Group. Nick has been paying close attention to the iShares Silver Trust (ARCA:SLV) for the last month or so, ever since the precious metal started to attract attention due to the “silver squeeze” narrative.

Silver rose briefly above US$30 per ounce in the initial excitement, but wasn’t able to maintain that level. It was below US$27 at the time of this writing.

Nick said a key fact he wants investors to be aware of is that exchange-traded funds (ETFs) are a tracking vehicle, not an ownership vehicle — in other words, if a person buys shares of SLV, it doesn’t mean they own ounces of silver. In fact, he explained that the iShares Silver Trust recently changed its prospectus, essentially saying that it may not be able to source the silver it requires.

“(The ETFs are) not about ownership. And that kind of thing works in financial assets and so on and so forth, but when it comes to precious metals, it’s critical you actually own the stuff” — Nick Barisheff, BMG Group

So — what’s the status of the silver squeeze? Nick said at this point it’s really a coin toss as to what happens, although he pointed out that the major bullion banks and other entities that are short silver will do everything in their power to stop a price rise.

For our poll this week, we stayed on theme with silver. We asked our silver-focused followers to tell us the main way they get exposure: physical silver, silver ETFs or silver stocks. Physical silver was the winner at 50 percent, followed by silver stocks at 38 percent and silver ETFs at just 12 percent.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space this week, INN’s Bryan Mc Govern took a look at M&A activity among Canadian companies. While the country’s major players previously had an eye on international expansion, many of them have narrowed their focus — they’ve either turned inward to focus on their own operations, or they’ve honed in on the US instead of looking further afield.

Why? According to Nawan Butt of Purpose Investments, they’ve switched from valuing growth to pursuing profitability above all else, and it will be important to watch their future progress.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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