The next GameStop: Silver Bullion?

Markets remained rocky on Friday, and the Dow Jones Industrial Average (DJINDICES: ^ DJI), S&P 500 (SNPINDEX: ^ GSPC), en Nasdaq Compound (NASDAQINDEX: ^ IXIC) everyone ended the day sharply lower. The move wiped out gains for the Dow and S&P for the month, with only the Nasdaq maintaining an increase of about 1.4% in January.

Data source: Yahoo! Finance.

The entire investment community is determined on what happened to stocks of short-term equity stocks. GameStop (NYSE: GME) and others have seen their stock prices skyrocket, and at least in some people’s eyes, it’s becoming a battle between Wall Street and average investors. As some brokers suspended temporary trading in GameStop on Thursday, some investors are looking for other areas where short pressures may occur. Although many of these brokers again allowed Friday to buy GameStop shares, some looked to silver stocks – and the precious metal – as options for a similar short print.

A wild ride for the white metal

Silver prices became volatile on Thursday afternoon. After trading around $ 25 an ounce earlier in the week, the price quickly rose to almost $ 27. The white metal retreated after hours of trading on Thursday and moved sharply in both directions overnight. But spot prices for silver rose again on Friday morning and closed just below $ 27 per ounce on Friday afternoon.

Image Source: Getty Images.

Silver investments had the same volatility. iShares Silver Trust (NEW: SLV) has risen by more than 6% over the past two days. Companies exposed to silver boosted their shares even further, with a power outage Wheaton Precious Metals (NYSE: WPM) climb 10% since Wednesday. First majestic silver (NYSE: AG) rose just 7% on Friday, bringing its two-day gain to more than 30%.

Some of the same groups of investors responsible for action in GameStop have apparently turned their attention to the silver market. Hyperbolic claims that they printed silver up to $ 1,000 per ounce led to challenging headlines, and at least some people on Wall Street took the discussion seriously.

Silver print? Will not happen

There are a few reasons why investors should not expect a functional pressure on the silver market. In the first place, commodity markets are much larger than the market capitalization of GameStop. There is a lot of real physical metal available to both bullish and bearish traders.

Second, silver has been under pressure in the past, so regulators are set on the signs of any kind of manipulation. In 1980, three brothers in the Hunt family tried to enter the silver market and captured about one-third of the tradable stock of silver. This caused a huge silver price increase, from about $ 6 per ounce in early 1979 to almost $ 50 per ounce just 13 months later.

However, when the stock exchange changed the rules for using margin, the Hunt brothers who had strong debt did not repay their debt when the price of silver began to fall. The resulting plunge brought gold prices back to the $ 5 to $ 10 range (per ounce) from the mid-1980s to the late 2000s.

Unlike GameStop stock, there are millions of people who have silver products. During the price increases in the past, many people took silver items to coin dealers, pawn shops and others to turn them into cash. No one on Reddit can control the big market.

Still shiny

Some view silver as less of an investment and more as a hard asset for portfolio protection. No matter how you view the precious metal, you do not have to worry too much about a real short print that will change the silver market soon.