WallStreetBets triggers silver market frenzy in attempt to stick it to Wall Street
The price of silver is rallying as the online trading movement fueling the rise of unloved shares like GameStop took a shine to the precious metal.
A "short squeeze" on the silver bullion market became the hot topic of discussion on the Reddit site WallStreetBets last week and over the weekend. Stocks related to silver soon saw their value spike for no apparent reason.
First Majestic Silver, a Canadian silver-mining company with the ticker symbol AG, maintained a stock price of around $14 a share for most of this month, but then shot up 21% on Thursday after the Reddit discussion. Fortuna Silver Mines saw its share price rise 14% Thursday to $7.62. The iShares Silver Trust, an exchange-traded fund that tracks silver prices, rose almost 6% Thursday to nearly $25 a share.
"$AG is essentially $GME for Silver," a Reddit user posted Thursday on WallStreetBets, comparing First Majestic Silver stocks to GameStop, adding "Highest short float in the sector, nice leverage to silver, and just broke out above 10 year resistance too."
Silver futures jumped almost 12% on Monday to more than $30 per ounce — an eight-year high — following strong gains over the weekend.
On Twitter, #silversqueeze was trending as investors turned their attentions to the latest market strategy to emerge from the WallStreetBets forum on Reddit. The online army of Reddit traders has over the past week rallied to defend out-of-favor companies such as GameStop and AMC, defeating hedge funds that had bet the companies' shares would fall by selling them short, in a stunning reversal of financial power transfixing Wall Street.
The big short-squeeze
Now silver has become the latest example of the influence wielded by followers of WallStreetBets targeting what boosters of the Reddit forum call inequality in the global financial system.
Michael Every, global strategist at Rabobank, said the claims online include assertions that gold and silver prices are being repressed by financial bets against them.
If the price goes up enough for an extended period of time, the thinking goes, the big investors who bet against gold and silver would eventually have to reverse those trades, buying back in — and pushing the commodities' prices even higher. That is partly what helped fuel a massive surge in GameStop last week.
The silver market frenzy also extended to physical purchases of the metal, with coin dealers reporting delays in deliveries as they were overwhelmed by demand.
The Silver Mountain, a Netherlands-based bullion dealer, said on its website that, "Due to extreme market volatility we cannot accept any new orders at this moment," adding it hoped to reopen by the afternoon.
Demand overflowed into Australian mining stocks shares, even those that have yet to start producing any of the metal. Silver Mines Ltd., which is working on an undeveloped deposit, jumped 50% on Monday, while other mining shares on the Australian Stock Exchange saw double-digit gains.