Value of silver surges as Reddit army behind GameStop switches focus to heavy metals
independent– Silver prices skyrocketed on Monday, touching a five-month high, after a Reddit army that drove up GameStop shares switched focus to metals.
Silver prices rose by 15 per cent since closing on Wednesday after small-time traders bought en masse, following a message on Reddit calling users to buy heavy metals to challenge mighty Wall Street hedge funds in a bizarre trading battle.
Reddit-propelled stock buying drove silver as much as 7 per cent to $28.99 an ounce, its highest value since mid-August.
Retail sites and coin-selling sites, however, warned customers that there could be delays in meeting the unprecedented surging demand for silver bars and coins.
This came after ailing video games retailer GameStop’s shares increased 1,700 per cent since December as Redditors pushed up the video game retailer’s value.
It all began as small-time traders revolted against large institutional investors that had placed market bets on GameStop’s stock that it would fall further. The volunteer army of investors on social media came together to call out short-sellers that seek to profit from the loss-making brands and trended #silversqueeze on Twitter.
The Reddit users on the forum WallStreetBets said that big banks are artificially suppressing the prices of silver and targeted the iShares Silver Trust ETF (SLV), the largest silver exchange-traded fund, to hurt large Wall Street players.
The demand for silver products forced retail sites to post warnings over the weekend, saying they would not accept further orders due to huge 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, believed to be world’s largest online retailer of precious metals, said on its website.
Unlike GameStop, which traded at less than $5 five months ago, and other stocks betted against by WallStreetBets, silver growth has remain strong over the past year.
“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,” CNN quoted Ryan Fitzmaurice, a commodities strategist at Rabobank, as saying.
The latest events is the example how major investors could suffer losses at the hands of small-time traders.
Melvin Capital, a premier Wall Street hedge fund that was caught up trading battle with GameStop, has lost 53 per cent in January, according to media reports.
