Silver Price Soars as Reddit Army Targets Commodities

Silver Price Soars as Reddit Army Targets Commodities
TradeGM Analysis date_range February 2nd, 2021

Last month saw the Reddit army of retail traders blow Wall Street and its hedge funds out of the water. The r/WallStreetBets army short squeezed Wall Street so hard that their story went viral. It would appear that the Reddit army now has its eye on precious metals.

The price of silver is up over 7% this morning, which is the highest it’s been since August 2020. These changes are the latest examples of what happens when retail traders mobilize on social media platforms. They began their advance last week by shoving capital into the iSharesSilverTrust, which recorded an unprecedented net inflow of $944 million on Friday.

In an article published by the Guardian, Ken Lewis, CEO of Apmex, was quoted saying:

“In the last week, we have seen a dramatic shift in Silver demand from our customers. For example, the ratio of ounces sold per day was running about two times earlier in the week and closer to four times the average demand by the end of the week. Once markets closed on Friday, we saw demand hit as much as six times a typical business day and more than 12 times a normal weekend day. Combined with the extremely high demand levels, we are also seeing a surge in new customers. On Saturday alone, we added as many new customers as we usually add in a week.”

Furthermore, according to Yahoo Finance, Ken Lewis also said that the decision to temporarily suspend silver sales was unprecedented in the company’s history and that it may take longer than usual to fill orders going forward.

Bloomberg reported that Silver broke above $30 an ounce in a retail investor frenzy sweeping through the markets, fueling the debate over the power of the Reddit army.

Kyle Rodda of IG explained that “Like the GameStop situation, there’s a back-story to the attempted pumping over silver prices: angered by the perception of a manipulated market for paper silver, the traders are looking squeeze the shorts on the silver market and force a correction in price that, so the argument goes, better reflects the supply and demand of the underlying commodity.”

“Last week’s events have shown it to be unwise to doubt the purchasing power of retail investors, and this has been sufficiently demonstrated again on the silver market,” said Howie Lee, an economist at Oversea-Chinese Banking Corp, as reported by Bloomberg. “They may find it a bit harder to squeeze the silver market than they did with GameStop — the former is much bigger and more liquid — but the momentum looks like it rests with them at the moment.”

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