caroline: from bloomberg world headquarters in new york and from right here in london, i am caroline hyde. romaine:'s look at where we stand in u.s. markets. the stocks keep on rising. yes and be posting its biggest rally -- the s and p posting its biggest rally in weeks. kailey: gamestop down 100 -- i am joking. we are talking about retail

traders finding this people -- finding the silverlining. the price of silver surging as the reddit army turned its attention to the precious metal. the ishares silver trust etf c and unprecedented flows of late. an investment product that benefits can griffin's citadel with its rallies. joe, you called it several years ago. silver bugs, they are into conspiracy theories. this has been another perfect storm of retail trade. joe: i am not going to say anything negative about silver bugs because i am worried that our guest coming up might be a customer. silver is doing very well and internet chatter seems to be a part of it. romaine: i don't think there are all that many shorts in this. you take a look at the cftc

positioning, you can see the net longs here, more important, you look at the trend line, even if you go back beyond 2017 this is not a heavily shorted sector of the market. joe: joining us is ken lewis. his firm is often called the walmart of precious metals in north america. extraordinary several days in the silver market. what was the intensity of the volume you saw for silver coins? and, to the best of your understanding, what catalyzed? >> volumes have been significant. we have done more volume on silver in the last three days then all of september. we are also seeing the type of investors are little bit different. a lot more new people to the

space. 43% of our new orders today are new customers. we are seeing a lot of new people coming into the market. you asked why. clearly, i believe the reddit, the silver squeeze popularity on twitter is driving an interest. they are doing a good job of it. caroline: longer-term, can they drive it higher? this is a much more expansive, liquid, deep market them gamestop, for example. ken: i agree with you 100%. when you look at the banks and their position on silver, it will be a longer play. i have read a few things, you talked about shorts and the amount of metal in the market.

the big play here is they are trying to make physical metal have to be delivered to the exchanges and is physical metal available to do that? i think there are questions when you evaluate supply and demand. romaine: i wonder about the regulatory aspects of people trying to corner this market. in a couple of those instances, it is not necessarily market forces that brought them down but the regulators or something akin to that kind of stepping in and pulling the plug. ken: again, it is not my expertise probably to speak to in great detail. look at its returns, performance. it has been more volatile in the last six months then i have ever seen silver really be. in terms of the downside risk, i

don't think it has nearly downside risk that you might see in other investments. joe: talk to us a little bit more about the silver supply chain. you get slammed with orders. moreover last three days then use offer all of december. what does that force you as a retailer of coins to do, to go out to your wholesaler. and what they tell you about your availability for you? ken: we have a very strong balance sheet. we normally keep 150 million to 180 million inventory on the books. when you look at the volume come a was about a third to about half of the silver we had. we had taken a strategic position, thinking silver would become a little bit more popular them it has in the past. we have actively been working the markets for silver. what we are finding is that

retail ready products is not as readily available as, say, a thousand outs silver bar or green or other forms of silver. that will be a tough go for us to secure the kind of demand out there for retail right now. we will probably have a difficult time selling silver on our website for at least a few weeks because of the demand. caroline: liquidity squeeze in terms of what is happening in the silver market. how sticky do you think these 40% of new clients today will be? ken: great question. it is something we look forward to evaluating. the order size is not the down. the new buyers tend to spend a little bit lower than your average order size.

we are not seeing that. we are seeing the products they are buying. they are buying the main street products. our top products are your traditional regal product's from formfactor's, bars, coins. they are not getting too far out there in terms of what they are buying. we really don't know. there is another side we like to highlight. you are seeing both sides of the equation also playing where you do have some retail buyback business that has also been strong. romaine: have you seen any spillover into other precious metals? ken: we had to unfortunately stop the sale of silver over the weekend. our goal business has been very healthy. there is a lot of favored views on that. gold has been very strong.

platinum has moved very well over the past few weeks and it has been strong as well. gold is our mainstream product. we normally sell gold at a higher rate than silver. joe: you mentioned large bars of silver, the likes of which a retail buyer will probably not buy, that is not where the shortage is. is the issue really more production capacity, i don't know what they are called. plants, factories to turn the bars into collectibles. how much of a squeeze is it there versus overall supply and demand for the metal itself? ken: we had the markets really hard today trying to source metal. we feed metal into manufacturers. we found that, when we went to the market defined grain and thousand outs bars, we were

fairly successful. when you talk about capacity, the u.s. mint, they have been on allocation for almost a year now where they cannot keep up with demand. they can only get so many blanks from their suppliers. i do think the bottleneck is primarily around minting and refining. back in march of last year, we had a run where the london exchanges kind of got out of sync and you saw a massive amount of silver get delivered to the exchanges. i don't know if we will see that again. but if those times start to see themselves, getting into the etf's and pushing delivery of metal, you could see thousand ounce bars start to drop as well. romaine: that is ken lewis, ceo of apmex, one of the biggest

dealers at thereof silver and precious metals. we will talk about the trade, is it retail traders, institutional investors? adrian ash is joining us next. this is bloomberg. ♪

joe: let's get more insight on the surging demand for physical silver. joining us, adria --, director research at the bullionvault. there seems to be a lot of ambiguity of what happened over the past few days. some people associating the surge in demand to read it.

-- demand to reddit. reddit saying, it is not us. have you ever seen anything like this where chatter on the internet creates this much of a demand serve in the short a period of time? adrian: bullionvault has been in the business 15 years. our customers combine gold, silver, platinum, that is what we do. 2020 was a record year for new interest. 2020 with record. january was a record january. last weekend was a record weekend. today was a record new single day. we have had almost as many new customers today as we had in all of february last year. it is debatable what was going on with the slv etf on thursday but that was the morning after

the reddit post. friday, the slv took in 1000 tons. you could say, this is the hunt brothers, this is warren buffett. i don't think so. i think this is a hive mind acting like a billionaire. it is like a corner in the market. we are seeing unprecedented levels of interest. i think it fits much with what is going on in the markets right now. gold price if you get it right. it has got a good story right now. absent the reddit thing, silver looks pretty good for 2021. romaine: i am curious, when we talk about the hive mind, that would suggest a lot of these folks are not in it for the long haul.

what happens when the hive mind decides to cash out? adrian: who knows. i know you have been taking flak on social, subreddit threads saying, this is hedge funds trying to build silver higher. let's get back to gamestop. are they going to get bored with silver only gaining 20% in 4-5 days? are they going to start looking at the case for silver longer-term? we don't know yet. the idea that they would come running in and run straight out again. how many of those people are

actually organized all at once? i don't think so. caroline: are you doing anything with demographic research, anecdotal evidence of what brought them here? people wanted to get into crypto in some way. before, gold had sort of fallen out of favor and people were looking at ways to bet against the u.s. dollar. adrian: what we know anecdotally is they tend to have -- a core customer tends to have pressure metals -- precious metals as part of a broader portfolio. 10, 15, 20%. they are self-directed by definition. your financial advisor will never tell you to buy gold or silver. that is something gold and

silver have in common with bitcoin because your financial advisor will never tell you to buy bitcoin. i think it is demonstrable that the level of interest, whether it was the reddit post on thursday or the news that it generated, has attracted people to look at precious metals for the first time. caroline: adrian ash, a busy man. director of research at bullionvault. coming up, the volatility continues for yet another day. we break down the impact of the retail buying frenzy on the derivatives market. this is bloomberg. ♪

caroline: today, we have focused on the new target of retail traders -- demand driving prices to levels we have not seen since

2013. all this frenzy in trading over the past week has helped push up volatility in the market. joe: we have been rallying for most of the year. volatility is still elevated. with all the action last week, with people selling their shorts , liquidating their long, continuing to see upward pressure on the vix. the index still well above precrisis levels. for more on this action, i want to bring in the co-cio of the emirates group. last week, it looked like what we were seeing was funds forced to liquidate their short. we got this churn a little bit quieter today. is that what happened from your perspective? and what does that mean from sort of a volatility view? >> i think there is a few interesting dynamics that took place.

you have these straight squeeze where they reflexively drive the stock price of a. from a pure delta one standpoint , all of these hedge funds besides melvin capital work short stock. that you had the reddit users flocking in and everyone and their best friend wanted to buy this stock. how some of the institutional guys were looking at this as well. some of the flow that was going through some of the routes. there was scooping at key levels. everyone was saying this was the wall street that's crowd but i think institutional guys were taking advantage of this as well. the derivatives markets specifically, i think what we will see is elevated skew may be on eight-month, one year.

you will see people go to some sort of defined risk type of play. some of these things should be pretty elevated. there definitely was some institutional guys taking advantage. we noticed some of the dislocations and positional imbalances. we were able to have a good month for our investors. i think it provided a lot of opportunity for a lot of people who spotted it. i think it will change the way people look at derivatives going forward. romaine: i am curious as to who is leading that charge, whether it will be the tail wagging the dog, whether it will be institutional folks looking to make that change order at least a little bit more self-aware about what has been happening and i guess they will set the tone going forward. kris: that is the question that

is up in the air. i think there is something going on that is really important. at what point do we draw the line and say that some of these brokers cannot intervene in free trade between market participants? even though they were under stress come at what point the regulator step in and say, you can't do that, you can't eliminate trade. i understand from the back end, some of the knock on effects, the ramifications that can happen on the banking side. but what about in a risk off scenario where things are down 15, 20%? did we now open up pandora's box to some of these brokers to say, you can't sell. why can't i sell? the volatility is too much.

it is a pay for play game. you are paying the broker to play the game. when you need the most, i think it is a little bit unfair. caroline: but you are not paying the broker. is that kind of the issue here? the race to the bottom, the zero fee, the no commission means that actually perhaps people will gravitate towards the better capitalized, the older guard, rather than the newer brokers on the block? kris: i think you will see some of that. in the best way i guess you could say, paying the broker, but the brokers survived by facilitating free trade. so they are making money when you come on their platform. obviously, there is talk about dumb platforms selling institutional flow to other

people. that is another avenue i don't want to go into. i do think that you will see people become much more cautious about some of these platforms thereon. also from a banking standpoint, this shows a fragility of the banking sector as well. it is a concern. i'm surprised that -- joe: we just have a minute left. on derivatives pricing, are we going to see a fundamental change to calls and the pricing of calls? if this becomes a regular thing, this manic flash mob call buying that can show up at any minute, will this reprice that end of the curve? kris: i do think you will see price side skew become more elevated. it was at that hockey stick,

understanding that markets go down, but i think it is coming back into a v. u.s. starting to see transition into that v-shaped. i truly believe market makers will start to price this out. they are raising the ball because they know that people are buying. romaine: we will have to leave it there. kris sidial, co-cio at the ambrus group. some breaking news crossing the wire on the number of vaccinations in the u.s. or americans that -- more americans have received at least one dose of that vaccine then have tested positive. caroline: nice to have some positive milestones to read out about covid. that does it for "what'd you miss?." romaine: daybreak australia's next in asia and australia.

this is bloomberg. ♪

emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, reddit traders at it again. this time, a call to start a #biowar on biotech companies looking to cure disease. this as gamestop falls back down again. plus, elon