A kilogram gold bar sits on top of silver bars at Gold Investments London gold dealers in this photograph organized in London, UK, on April 4, 2013.
Simon Dawson | Bloomberg | Getty Images
Silver futures contracts rose on Sunday night as the boom fueled by Reddit in highly sold stocks appears to be spreading to the metals market.
Silver futures rose 8% shortly after the opening of the futures market, marking the biggest movement in the futures market since at least 2013. The latest contracts were traded with a 6.8% increase.
The abrupt bullish move builds gains for silver and silver-related stocks at the end of last week. Silver mining shares Coeur Mining and Pan American Silver were up 16.9% and 14.7%, respectively, on Thursday and Friday. The iShares Silver Trust jumped 6.7% during those two sessions.
The increase in demand for silver appears to be related to retail traders on the Reddit WallStreetBets forum, which has helped boost commercial activity in heavily sold stocks like GameStop and AMC Entertainment in recent weeks.
The forum had several active topics dedicated to silver on Sunday night. The phrase “#silversqueeze” was also a trend on Twitter.
The silver move has been praised by investors who are optimistic about cryptocurrencies like Bitcoin, who see the new digital assets in part as substitutes for traditional metals.
Cameron Winklevoss, co-founder of cryptocurrency company Gemini, said on Twitter that: “The ramifications of a #silversqueeze cannot be underestimated. If it is exposed that there are more paper claims on silver than real silver, not only would the return be huge, but gold would be next. #Bitcoin fix that. “
The dramatic spikes in GameStop and other heavily sold stocks were due in part to a tightening of the sale, which is a phenomenon in which investors who bet against a stock are forced to buy stocks to cover their positions as the name goes up.
Melvin Capital, one of the hedge funds that originally had short positions on GameStop, lost 53% in January.