The price of silver (SI = F) has skyrocketed more than 10% to its highest since February 2013 on Monday, trading briefly above the $ 30 (£) mark per ounce, as retail investors accumulated in the commodity.
It became the most recent target after a retail frenzy last week saw companies like GameStop (GME) and AMC Entertainment (AMC) revolt against major institutional investors.
Recently, amateur traders have been buying stocks and assets that Wall Street funds bet against. Likewise, traders are looking to tighten short positions in silver.
There have been thousands of posts on Reddit with various mentions of the hashtag #silversqueeze and a series of videos on YouTube encouraging small investors to buy the precious metal.
The increase took silver miner Fresnillo (FRES.L) almost 20% higher at the start of trading in London, while Glencore (GLEN.L), BHP (BHP.L) and Anglo-American (AAL.L) also went up.
Users of the Reddit Wallstreetbets forum argued that silver is a highly manipulated market and that an increase in the price of silver could hurt large financial services companies.
“Think of Gainz. If you don’t care about earnings, think of banks like JP Morgan that you would destroy along the way, ”posted a Reddit user.
“It remains to be seen whether it will be as easy to swerve around silver as GameStop was,” said Russ Mold, chief investment officer at AJ Bell.
“You can understand why silver is attracting the attention of social media dealers looking to vent their fury and profit from short sellers. Claims and fines for investment banks that manipulate the precious metals markets have abounded for some time. More fundamentally, the money supply is increasing, markets in general are watching carefully for any signs of inflation and precious metals are traditionally seen as a potential hedge here.
“In addition, gold is currently traded at 70 times the price of silver, against the long-term average of 58 times, so on paper, silver is the cheapest of the precious metals. This will be an interesting test of conspiracy theories that precious metal prices have been kept artificially low. “
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The world’s largest silver-backed exchange-traded fund, iShares Silver Trust (SLV), recorded nearly $ 1 billion (£ 730 million) in revenue on Friday, according to data from BlackRock, the fund’s sponsor. It was the biggest one-day rise since the ETF started trading in April 2006.
Meanwhile, US brokerage APMEX said it saw demand reach up to six times on a normal business day and more than 12 times on a normal weekend day on Friday.
“Combined with extremely high levels of demand, we are also seeing an increase in the number of new customers. Only on Saturday, we add as many new customers as we normally add in a week, ”he said.
In November, about $ 6 billion in silver was traded on the silver market, according to the latest statistics from the London Bullion Market Association. London’s coffers store around 33,500 tonnes of silver, valued at about $ 24 billion.
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