Johannes Eisele / AFP / Getty Images
- Global stocks jumped on Monday when the army of retail investors sold a new favorite asset: silver.
- The world’s largest silver-backed ETF posted a record $ 1 billion in tickets on Friday, FT said.
- Silver surfers sent the London benchmark and UK mining stocks up in the new short-squeeze.
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Global stocks soared on Monday, with retail investors shifting their focus to the silver market, showing that the Reddit frenzy has spread from stocks and cryptocurrencies to precious metals.
The S&P 500, Dow Jones and Nasdaq were up between 0.8% and 1%, suggesting a higher opening for US market indices later in the day.
On Sunday, a group of 10 Republican senators proposed an alternative $ 600 billion economic plan compared to President Joe Biden’s $ 1.9 trillion aid plan. Although the Republican Party’s latest proposal is much smaller than Biden’s, the markets reacted positively, as it suggests that negotiations may move forward again.
Silver jumped nearly 12% on Monday, from just under $ 25 to over $ 30, the highest since last August, as the world’s largest ETF, the i-Shares Silver Trust, set a record $ 1 billion in tickets on Friday, according to the Financial Times.
“While it is much more difficult to move this market compared to smaller stocks like GameStop, last week’s events showed that the impact of the retail frenzy should not be underestimated,” said Milan Cutkovic, market analyst at AxiCorp.
The impact of the r / wallstreetbets movement caused immense volatility in the US markets last week, causing short sellers to anticipate a new explosion of nostalgic stocks. The volatility was driven by market positioning, not by concerns about growth, according to Mark Haefele, chief investment officer at UBS Global Wealth Management.
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“There is little doubt that the huge central bank liquidity and government stimulus checks in the hands of underemployed / dismissed retail investors (through no fault of their own) will be a big part of this bubble story,” said Jim Reid, director administrative search for cross-asset research at Deutsche Bank.
Silver bulls began to impact prices elsewhere, causing the London benchmark and mining stocks to increase.
The UK’s FTSE 100 rose 0.8%, Euro Stoxx 50 rose 1.3% and Germany’s DAX rose 1.4%. Mining companies Glencore and Anglo American, leading shares, rose 3% and 2.7%, respectively.
However, Connor Campbell, a financial analyst at SpreadEx, noted that there is speculation that Reddit is not necessarily behind the latest move.
“While there are pro-silver posts on WallStreetBets, the ‘main post’ on the subject is against trade, claiming that ‘by buying silver, you would be putting money directly into the pockets of HEDGE’S EXACT FUND ON THE OTHER SIDE OF $ GME'” he said. “The same poster also stated that the short squeeze was ‘an attack coordinated by a hedge fund so that they can continue fighting the $ GME fight’.”
Elsewhere in Asia, China has seen a drop in an important business activity index, as the resurgence of the coronavirus has affected general sentiment. The lowest purchasing managers’ index suggests that momentum has slowed for the time being, although the pan-Asian recovery remains on an upward trend, said Jeffrey Halley, senior market analyst at OANDA.
China’s Shanghai Composite was up 0.6%, Japan’s Nikkei was up 1.5% and Hong Kong’s Hang Seng was up 2%.
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