Silver Prices Surges Due to Reddit WallStreetBets Group

Recent financial discords between Reddit’s WallStreetBets group and social media speculators have shown that the stock market isn’t the only factor that can affect stock prices.

Reddit influencers aren’t only influencing the stock market as they have moved to the precious metals market. Silver (SLV) futures jumped as high as 8.5% above $29 Sunday evening, following a 6% rally last week and hitting a five-month high.

This upsurge in silver prices came after retail sites warned customers over the weekend that it was impossible to meet the high demand for silver bars and coins. As a result, “silversqueeze” trended on Twitter.

Last week, the Reddit WallStreetBets group caused the prices of GameStop, AMC, and other heavily shorted stocks to skyrocket, sending the market in an uproar and crushing some hedge funds that bet against the group-backed stocks. For example, Robinhood came under fire for restricting trades in GameStop and several other stocks.

Before Sunday evening, betters and investors on WallStreetBets set their goal on silver and iShares Silver Trust ETF (SLV). Some believe that the surge in silver prices could be an attempt to throw a jab at big banks that are believed to be artificially suppressing the silver process.

“SLV will destroy the biggest banks, not just some little hedge funds,” a r/WallStreetBets user wrote. Another user claimed JPMorgan Chase has been “surpressing metals for a long time” and the move “should be epic.”

On Thursday, shares of silver miners spiked, and iShares Silver Trust, the largest exchange-traded fund saw a buying frenzy of options after the market emerged as a target of the WallStreetBets. Analyst at Commerzbank AG Eugen Weinberg described the move in a not as “extreme” and have “little fundamental justification.”

“Retail investors who have been swapping tips on such information platforms have caused massive shifts in the prices of some of the shares,” Weinberg added. “We are confident that the influence of retail investors on silver will not last that long, and that ultimately industrial and institutional demand will be the key factor in the longer term.

Some top retail sites warned over the weekend that they faced high demand for physical silver products.

“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,” wrote APMEX, a self-acclaimed world’s largest online retailer of precious metals, in a notice on its website.

Similar notices were seen by several other retailers including SD Bullion and Money Metals.

“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, said Ryan Fitzmaurice, a commodities strategist at Rabobank. “It is a dramatically different market setup. I am not sure how well this new Reddit trading strategy will fare in futures markets and especially the notoriously volatile commodity markets.”

Weinberg also said that in the very short term, more people will become cautious about holding a short in precious metals, despite what may be ongoing in the markets or what the fundamental view is.

Wallstreetbets group are discussing this too and they want to run this price up and higher than ever seen before. Could this be possible? can they run up the SLV stock price like they did to GameStop?