Reddit Retail Activists Look Towards Silver
In a curious turn of events on the GameStock saga, the group of retail investors from the “WallStreetBets” Reddit group have apparently turned their focus to the metals markets – namely, silver.
All last week Reddit traders were buying up shares of companies such as GameStop and American Airlines, driving up the prices and forcing short sellers to buy more stock to meet margin calls. Now, the amateurs seemed to have moved on to ETFs that track the price of silver in hopes that price rises would force those shorting the precious metal to also buy up more.
On Monday, the iShares Silver Trust rose 8.1% on the heels of a 6% jump last week.US silver miners increased late last week, and the trend is more likely to continue in Europe. The FTSE 100 miner Fresnillo, for instance, is likely to see heavy gains if this trend continues. Last Friday’s cash flows into the Silver Trust have been the biggest since 2006. Silver mining stocks such as Coeur Mining and Pan American Silver were up 23.1% and 12.1% respectively on Monday. On Thursday and Friday, the stocks continued to rise 16.9% and 14.7% respectively.
The Reddit forum had different active threads dedicated to silver on last Sunday, with the hashtag #silversqueeze trending on Twitter. Not all the discussion on Reddit was in favor of buying silver. Some participants argued that the “silver squeeze” was an attempt to distract from the trading in GameStop and other shorted companies. Nevertheless, over 4 million shares of the ETFMG Prime Junior Silver Miners ETF were traded last Thursday and Friday. The average three-month volume is 1.56 million, according to the firm’s director of sales, Stephen Gardner. He also said that the value was rising due to continued fiscal stimulus and that banks were typically net short on silver, apart from the Reddit situation.
Gardner talked about the implications of this, stating that “If this continues, you could see some more buying pressure. But I think when making a comparison to something like GameStop or AMC ... it’s important to keep in mind that the silver market is much more liquid,” On the other hand, Cameron Winklevoss, co-founder of cryptocurrency firm Gemini, stated that, “The ramifications of a #silversqueeze cannot be underestimated. If it’s exposed that there are more paper claims on silver than actual silver, not only would the payoff be enormous, but gold would be next. #Bitcoin fixes this.” The situation could drive more investors towards cryptocurrencies if metals like gold and silver become too unstable, but it is not clear how soon this shift could take place.
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