For instance, having a short squeeze in silver could be difficult because it’s a much deeper and more highly liquid market. For instance, GameStop’s market cap was $1.4 billion in mid-January, but this increased 16 times over when Reddit traders started to talk up the stock. If we look at the quantity of silver stored in London vaults, it is nearly 1.08 billion ounces of silver, according to the LBMA data released back in November 2020. This puts the silver valuation stored in these vaults to almost $32 billion. It is too soon to determine whether or not the ‘silver squeeze’ movement will have any long-lasting impact on the silver market. Traditional silver stackers, who have been accumulating silver bullion for decades, are getting together with young millennials, for whom the concept of hard currency is new and fresh.
Shortly after the news of a possible silver squeeze there were many posts on the subreddit denouncing this move as members sought to distance themselves from the idea. Despite having a consistent motive to the previous short squeezes – a protest against short-selling hedge funds – there are a number of issues when it comes to shorting the silver market. The first and second silver squeezes were said to have been conducted via the world’s largest silver Exchange Traded Fund https://www.investorynews.com/ (ETF), iShares Silver Trust, which has a $15.97 billion market cap at the time of writing. The idea was to buy into the ETF which would force the fund to allocate new shares and purchase silver to back them. A sharp surge in interest in the ETF would lead to a sudden increase in the demand for silver and likely result in a sizeable increase in the price for the commodity. Silver is different in many ways from individual stocks like GameStop, AMC, Blackberry and many more.
During the inflationary period in the 1970s, William Hunt, Lamar Hunt and Nelson Hunt set out to corner the market on silver. They purchased both physical assets and paper silver (e.g. futures contracts). For a while in February, silver was the talk of the town in the precious metals world. Internet searches related to buying gold had long dominated similar searches for silver. One look at Google Trends, though, shows that silver overshadowed the yellow metal for an entire week.
Reasons why a Forced Silver Squeeze is Unlikely:
With each piece we write, we bring our own personal experience and expertise, while combining that with today’s leading research and data. Our ultimate goal is to help extend our award-winning customer service to our educational content. Ultimately, we want you to feel comfortable and informed when making investment decisions, regardless of whether that is with us or not. https://www.topforexnews.org/ Thank you for being part of the Silver Gold Bull community. Making investment choices is a personal decision, but it’s hard to overlook what’s happened in recent months. There’s definitely an impending silver shortage coming, and when combined with issues such as government reserves and industrial needs, enormous increases in the price of silver could be on the way.
- Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms.
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- The idea of a silver squeeze, in very basic terms, is this.
- @Robert NYC retail emptying the mi ya is meaningless as they are just incompetent businesses, and what they sell is immaterial to the move of the price of silver …
But if the price rises, I’m forced to buy it back at a higher price, and I lose money. And the iShares Physical Metals Physical Silver ETC (ticker SSLN) has just shot up into the top 10 most viewed investments on the Hargreaves Lansdown website. Because this fund tracks the market price of silver, SSLN is up nearly 10% today. At Silver Gold Bull, our content is researched, written, edited and reviewed by a team of financial experts with decades of experience in the precious metals industry.
To some extent, we have seen a validation of these beliefs – but perhaps not to the extent that many of these rebellious Reddit traders would have wanted. Spot silver prices quickly broke above a key psychological marker at $30 per ounce on February 1st and this is significant because we have not seen these price levels since February 2013. The value of your investments can go down as well as up and you may get back less than you put in. Tax treatment depends on your individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Robinhood’s faced major backlash and several lawsuits for restricting trading of some meme stocks.
WallStreetSilver and the Silver Squeeze: What You Need to Know
The price of silver rose less than $4 between Friday the 29th of January and Monday the 1st of February. Thereafter, for the remainder of February prices actually dropped below the spike high but remained above the pre-squeeze levels. Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses. The big bull run started on January 28, when the silver open price was $25.26 and the low was $24.86.
This way, the manipulators can continue their schemes to suppress the price of silver, ergo making paper assets (i. e. the Federal Reserve debt notes called “dollars”) look more attractive vis-a-vis the real money assets of gold and silver. For these reasons, we think that precious metals investors can still find value in the silver ETFs now that the iShares Silver Trust has managed to generate a sustained bounce off of its November 2020 lows (just above $20.50). For SLV in particular, the psychological barriers at $30 could provide headwinds in the near term but the broader bullish trend remains strong and we think it’s simply a matter of time before these barriers are broken. If a lot of new investors rush to buy silver, raising the price, the short-sellers will be forced to buy it back at a much greater price.
What Is Basel III & Silver Squeeze in Simple Terms? Defining the Catalysts to Real Gold & Silver Prices
They have claimed that a handful of commercial COMEX traders are holding a large short position that far exceeds the amount of physical silver they actually possess. This situation has been allowed to continue since most traders https://www.currency-trading.org/ who purchase futures contracts choose to settle for cash and rarely take delivery of the actual metal. Allegedly, this can create the false impression that there is an abundance of silver, while in fact, it is in short supply.
Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples. DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material. It was shortly after the Reddit-fueled, meme stock saga that the silver market landed squarely in the cross-hairs of the online community. However, the supposed silver squeeze and the one that followed have been rather ineffective when compared to short squeezes on Gamestop (GME) and the like.
Contact us now at [email protected] to find out more about buying and storing silver bars and coins in a secure and private manner. 3D illustration of silver bullion bars over a blue background with growing chart. @Tubsy , I would label that someone as a silver expert and not a silver bug. A silver bug species has yet to be discovered and identified by science.
Inflation: The Final Catalyst to Real Gold and Silver Prices
The company has struggled during the COVID-19 pandemic, and its revenues have been declining. Many speculated that it would go under, and as a result, the short interest in the company rose during January to 140% of the available shares. Traders in the “WallStreetBets” Reddit community noticed this anomaly and decided to exploit it by piling into the stock. This triggered a massive short squeeze that sent the stock price up 2,400% in 11 trading days. According to some estimates, this has cost Wall Street firms up to 70 billion dollars and almost bankrupted a prominent hedge fund called Melvin Capital.
If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products. Its goal is to closely mimic the performance of the price of silver. “Shares of the Trust are not subject to the same regulatory requirements as mutual funds,” according to the iShares site. @Da Sage But pulling demand across the world on retail cannot hurt. Just wait until Apple and Tesla start buying up the futures and demanding delivery. Ohhhh yeah, and the worlds silver production for the last year was way down because of COVID.
