The price of silver (SI = F) rose by more than 10% on Monday to its highest price since February 2013 and traded briefly above $ 30 (£) per ounce., when retail investors accumulate the commodity.
It has become the latest target after a retail frenzy last week sparked the sharply shortened GameStop (GME) and AMC Entertainment (AMC) in revolt against major institutional investors.
Recently, amateur traders have been buying stocks and assets that Wall Street funds are betting on. Similarly, retailers want to impress with silver shorts.
There have been thousands of Reddit posts with several mentions of the hashtag #silversqueeze, and a series of videos on YouTube encouraging small investors to buy the precious metal.
The boom sent silver miner Fresnillo (FRES.L) almost 20% higher in early trading in London, while Glencore (GLEN.L), BHP (BHP.L) and Anglo-American (AAL.L) also rose.
Users in the Reddit forum Wallstreetbets argued that silver is a highly manipulated market, and that a rise in the silver price could hurt large financial services businesses.
“Think of the Gainz. If you do not care about profits, think of banks like JP Morgan that would destroy you along the way,” a Reddit user posted.
“Whether it will be as easy to avoid silver as GameStop remains to be seen,” said Russ Mold, investment director at AJ Bell.
‘You can understand why silver is attracting the attention of traders on social media who want to exploit their anger on short sellers and benefit from it. Allegations and fines for investment banks setting up markets for precious metals have been in abundance for some time. More fundamentally, the money supply is rising, the markets are generally looking closely at any signs of inflation and precious metals are traditionally seen here as a potential hedge.
“In addition, gold currently trades at 70 times the silver price, compared to the long-term average of 58 times, so on paper, silver is the cheaper of the precious metals. This will be an interesting test for the conspiracy theories that the price of precious metals is kept artificially low. ”
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The largest import-traded fund in the world, iShares Silver Trust (SLV), showed an inflow of almost $ 1 billion (£ 730 million) on Friday, according to data from BlackRock, the fund’s sponsor. This was the largest one-day increase since the ETF began trading in April 2006.
Meanwhile, the American bully broker APMEX said that the demand hit as many as six times a typical working day and more than 12 times a normal weekend on Friday.
“In combination with the extremely high demand levels, we are also seeing an increase in new customers. “On Saturday alone, we added as many new customers as we usually add within a week,” he said.
According to the latest statistics from the London Bullion Market Association, the silver market traded around $ 6 billion in November. The London vaults contain about 33,500 tons of silver, worth about $ 24 billion.
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