Silver surges as Reddit army targets precious metals

Silver surges as Reddit army targets precious metals

New York (CNN Business) Move over GameStop, Reddit mania is spreading to the precious metals market.

Meanwhile, retail sites warned customers over the weekend they could not meet skyrocketing demand for silver bars and coins. And “#silversqueeze” is trending on Twitter.

In more recent trading, silver futures were up 6.5%.

The moves provide another example of the power of a group that has captivated Wall Street and Main Street : WallStreetBets. The Reddit forum sentand other heavily shorted stocks skyrocketing last week, roiling markets and crushing some hedge funds that had bet against those stocks. Robinhood, the free-trading app, came under fire after restricting trades in GameStop and other stocks.

iShares Silver Trust ETF SLV , with some suggesting it could be a way to hurt big banks they believe are artificially suppressing prices. People on WallStreetBets set their sights on silver and thelast weekwith some suggesting it could be a way to hurt big banks they believe are artificially suppressing prices.

“SLV will destroy the biggest banks, not just some little hedge funds,” one WallStreetBets user wrote.

Another claimed JPMorgan Chase has been “suppressing metals for a long time. This should be epic. LOAD UP.”

The Winklevoss twins, who famously sued Facebook’s Mark Zuckerberg and were early backers of bitcoin, both tweeted support for the push by WallStreetBets into silver.

“The #silversqueeze is a rage against the machine,” Tyler Winklevoss tweeted

“If silver market is proven to be fraudulent, you better believe gold market will be next,” Cameron Winklevoss tweeted.

Leading retail sites posted warnings over the weekend that they faced heavy demand.

“Due to unprecedented demand on physical silver products, we are unable to accept any additional orders on a large number of products, until global markets open Sunday evening,” APMEX, which calls itself the world’s largest online retailer of precious metals, wrote in a notice atop its website.

SD Bullion warned that “due to unprecedented silver demand” it would also be unable to accept orders until Sunday evening. Similar notices were posted by Money Metals and other websites.

“It’s not surprising to see the sharp and abrupt uptick in consumer demand overwhelm the physical supply of silver coins held by dealers in the short term,” Ryan Fitzmaurice, a commodities strategist at Rabobank, told CNN Business in an email.

However, unlike GameStop and other unloved stocks targeted by WallStreetBets, silver futures have been strong of late. Hedge funds and other institutional investors had been bullish on silver futures and the precious metal was trading near multi-year highs.

“It is a dramatically different market setup,” Fitzmaurice said. “I am not sure how well this new Reddit trading strategy will fare in futures markets and especially the notoriously volatile commodity markets.”

Silver prices, miners surge as retail buyers pile in

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Silver catches GameStop frenzy as Redditors send prices soaring

SINGAPORE (REUTERS) - Silver prices surged to a five-month high on Monday (Feb 1), silver-mining stocks leapt and coin-selling websites were swamped as small-time investors piled in to the metal, the latest focus of a retail-trading frenzy that has set financial markets on edge.

Organised in online forums and traded with zero-fee brokers, such as Robinhood, the phenomenon has driven a 1,500 per cent rally in the shares of videogame retailer GameStop as the crowd targets assets that big fund managers had bet against.

Since mid last week, thousands of Reddit posts and hundreds of YouTube videos have encouraged small investors to buy silver, partly in the belief that lifting its physical price could hurt large investors who had made paper bets that it would fall.

Spot silver leapt as much as 7.4 per cent in early trade on Monday to US$28.99 an ounce, taking gains to about 15 per cent since last Wednesday and the price to its highest since mid August.

Silver-tracking exchange-traded funds in Japan and Australia also jumped and small Sydney-listed miners soared, while broader markets fell as the frenzy jangled investor nerves.

Money Metals, an online exchange for precious coins and bullion, posted an “EXTREME DEMAND ALERT” banner across its homepage, and capped orders at US$10,000. Rival SD Bullion warned of shipping delays due to “unprecedended demand”.

“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyse something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.

“This is their big, bold Moby Dick moment,” he said.

The popularity of dabbling in stockmarkets has grown globally during the Covid-19 pandemic as volatility, stimulus cheques and lockdowns have driven account openings and investment.

The trend has turbocharged a long equities rally, and begun to make brokers in places like South Korea a little worried as investor loan volumes rise to record highs.

The craze hit fever pitch last week when the GameStop pile-on resulted in a “short squeeze,” which turned price gains stratospheric as hedge funds with bets against the stock desperately bought it at big prices to close their positions.

“The turnover suggests that it’s not just Redditors that are involved now,” said Michael McCarthy, strategist at broker CMC Markets in Sydney.

“Having said that, the 5 per cent gain in silver prices is a very solid lift, particularly when gold prices are static, it certainly does suggest that the impact of messaging in social media is becoming much more significant.”

Among some of the strongest small mining stock gains were Thomson Resources, which soared as much as 60 per cent - or eight Australian cents - and Investigator Resources Ltd which jumped nearly 40 per cent.

Both are explorers which did not produce silver for sale in 2020.