The Silver Squeeze: Redditors Divided And Silver Value Soars As Online Traders Switch Focus To Commodities

Melissa holds a bachelor’s degree in English education as well as a master’s degree in the teaching of writing, both from Humboldt State University, California. There are merits for both metals, especially as part of a well-balanced portfolio. As many analysts point out, silver has been known to limefx outperform its sister metal gold during times of economic prosperity and expansion.

Because I had been correctly expecting a serious economic crisis, I have favored safe-haven assets over risk assets such as stocks and real estate. I still believe that these safe-havens will thrive in the years to come as central banks continue to flood the world with liquidity in an attempt to prop-up the debt-ridden global economy. Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses. The big bull run started on January 28, when the silver open price was $25.26 and the low was $24.86.

This situation has been allowed to continue since most traders who purchase futures contracts choose to settle for cash and rarely take delivery of the actual metal. Allegedly, this can create the false impression that there is an abundance of silver, while in fact, it is in short supply. Unfortunately, the silver market is quite opaque, and we have no way of knowing whether these allegations are true or not. But as far as the people on the newly formed “WallStreetSilver” forum are concerned, this is indeed the truth, and they are determined to expose it. The risk of an explosive silver short squeeze is further amplified by the astonishing ratio of 408 ounces of “paper” silver—ETFs, futures, and other derivatives—for every single ounce of physical silver. In a violent short squeeze, holders of “paper” silver could be forced to scramble for the extremely scarce physical silver to fulfill their contractual obligations.

Silver prices surged by more than 10% to over $30 an ounce Monday morning as Reddit-informed retail traders piled in on the commodity, the highest since February 2013. Because of these decreases, many people called it history’s “greatest theft in the silver market.” The raid that found its roots in WallStreetSilver intended to push back against price manipulation. In fact, we could make an argument that WallStreetSilver single handedly created the current drive to buy physical silver. Buying during the pandemic certainly played a big role, but it wasn’t until Reddit investors jumped in that the sale of bullion jumped over 250 percent. While this high level of interest has waned a bit, people have remain focused on WallStreetSilver, the Silver Raid and the potential impending silver squeeze.

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Neumeyer’s March 2023 triple-digit silver call is a long-term call, and he explained that while he believes gold will break US$3,000 this year, he thinks silver will only reach US$30 in 2023. However, once the gold/silver ratio is that unbalanced, he believes that silver will begin to take off, and it will just need a catalyst. He Beaxy has also stated that silver production has gone down in recent years, meaning that contrary to popular belief, he believes the metal is actually a rare commodity. Keith Neumeyer of First Majestic Silver has said he sees the white metal reaching US$100 per ounce.

President Biden has promised to invest 1.7 trillion dollars to fight climate change, an initiative that will involve a transition to renewable energy sources such as solar panels. Since a solar panel requires a certain portion of silver for its manufacture, we can only expect industrial demand to increase in the future. Another source of demand which is on the rise is electric vehicles, which require much more silver to produce than traditional internal-combustion-engine vehicles. If the great success of Tesla Motors is any indicator of things to come, the transportation sector will surely need more silver. All of these factors are beneficial for the price of silver, regardless of investment demand. As this happens, it’s easy to foresee a significant increase in the price of silver.

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As a by-product metal, investors can also gain exposure to silver through some gold companies. Many have also piled into the one-time-joke cryptocurrency Dogecoin, which was inspired by a viral image of a Shiba Inu dog. At its peak, Robinhood restricted trades from 50 companies, including GameStop, AMC Entertainment, BlackBerry and Nokia. To understand the silver squeeze, you first need to know the meaning of a short squeeze. Another way to assess whether silver is undervalued or overvalued is by comparing it to various money supply measures. M2 money supply, providing insight into whether silver is keeping pace with, outpacing, or lagging behind money supply growth.

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The sales director also said that the size of the silver market would make it difficult for retail traders alone to create a sustained move higher. Melvin Capital, one of the hedge funds that originally had short positions in GameStop, lost 53% in January. “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.

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• If the stock price drops to $30 per share, the trader can buy back the 100 shares for $30 each, costing $3,000.
• Silver is different in many ways from individual stocks like GameStop, AMC, Blackberry and many more.
• More recently, the huge economic impact of the COVID-19 pandemic, Russia’s war with Ukraine, the banking crisis in early 2023 and rising tensions in the Middle East brought about by the Israel-Hamas war have been sources of concern for investors.
• The dramatic spikes in GameStop and other heavily shorted stocks were due in part to a short squeeze, which is a phenomenon where investors who have bet against a stock are forced to buy shares to cover their positions as the name moves higher.
• Because I had been correctly expecting a serious economic crisis, I have favored safe-haven assets over risk assets such as stocks and real estate.

People can argue over whether the price of silver will skyrocket, but it’s hard to deny that market manipulation exists. Even if there were no underlying “bad acts” on February 2, 2021, the Hunt brothers have already proven that the government and heads of exchanges can change rules when they want to. Some of the biggest recent happenings in the investment world have arisen thanks to users of the Reddit website and app. The insane increases seen in GameStop and AMC share prices had their inception in the WallStreetBets community, and the big news in silver is at least partially attributable to WallStreetSilver.

On Friday, January 29, silver prices touched a high of $27.65, and this bull run pushed the silver spot price above $30 today. In addition to this, today’s one-day percentage gain is the biggest since 2008. We also revisit the “Silver Squeeze” from the same period, where Reddit traders targeted the silver market, aiming to expose alleged manipulation by large financial institutions. It’s a well-known fact that silver and gold can help you hedge against inflation. The key is purchasing gold and silver before the steep premiums that could culminate as a result of Basel III, the #SilverSqueeze, and inflation.

Any descriptions of Crypto.com products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation. While short squeezes can lead to substantial profits for some, they also carry inherent risks and can contribute to increased market volatility. As the cryptocurrency market continues to evolve, staying informed and employing robust risk management strategies is crucial for those participating in this dynamic and often unpredictable landscape. The move in silver was touted by investors who are bullish on cryptocurrencies the wisdom of finance: discovering humanity in the world of risk and return: a review like Bitcoin, which see the new digital assets in part as replacements for traditional metals.