Silver prices continue to rise for the third day in a row. Comex silver futures soared 13% to $29.29 an ounce on Monday. This is because WallStreetBets traders, who recently raised the value of GameStop shares by thousands of percent, suddenly turned their attention to a commodity, namely silver. Also in favor of this hypothesis is the weak ratio between the two most liquid precious metals: the value of gold tends to the indicators of silver, but extremely weakly. Gold quotes immediately fall on the slightest silver corrections.
To date, the bids to buy silver significantly exceed the bids to sell it that traders around the world place. BlackRock's iShares Silver Trust (the largest ETF investing in silver) recorded an unprecedented net inflow of assets last Friday - as much as $944 million.
Why is this happening?
So, on Thursday, January 28, a member of the popular forum WallStreetBets on Reddit published a call to create a short squeeze on silver, that is, the forced closing of short positions by traders against the backdrop of rising prices. When prices start to rise unexpectedly, those traders who are short are forced to buy assets to avoid closing positions at an even higher price. This is how short positions are crowded out.
This is not the first case, by the way. Traders from the media platform Reddit, as well as several other platforms, recently raised the prices of securities of the American video game company GameStop, the theater chain AMC Entertainment Holdings - all through agreed purchases of securities. Now, these activists have decided to stir up the commodity market.
This situation with silver is still very different from the stock market. The silver market is significantly larger than the market for GameStop stocks. So, the capitalization of GameStop before the focus of attention on it by Reddit users was approximately $1.4 billion. In the silver market, this figure is estimated at $48 billion in London alone.
How long intraday investors will be keen on trading silver remains an open question. Although, many well-known members of the WallStreetBets forum are already openly opposed to this.
After the instigator of such a "flash mob" published a message calling to attack silver and organize "the largest short-squeeze in the world and thus go down in history", a few hours later, silver quotes have rapidly crept up. This attack coincided with the start of the American trading session, and the capital inflow into the SLV for the next trading day was almost $1 billion.
