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Reddit traders have set their sights on their next target: Silver.
Futures contracts for the precious metal jumped Monday, extending recent gains as the Reddit-fueled buying frenzy spilled over into the commodities market.
Silver futures jumped 11% on Monday to about $30 per ounce – an eight-year high – following strong gains over the weekend. The rally comes after silver prices advanced more than 5% last week.
On Twitter, #silversqueeze was trending as investors turned their attention to the latest market strategy to emerge from the “WallStreetBets†forum on Reddit.
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Silver has rallied in recent trading days after users on the forum posted about executing a “short squeeze†similar to ones that drove recent gains in stocks like GameStop and AMC.Â
The online army of Reddit traders have over the past week rallied to defend out-of-favor companies such as struggling videogame retailer Gamestop and theater chain AMC Entertainment, defeating hedge funds that had bet the shares would fall by selling them short, in a stunning reversal of financial power transfixing Wall Street.
The silver market frenzy extended to physical demand for the metal, with coin dealers reporting delays in deliveries as they were overwhelmed by demand. AÂ big move in the physical price of silver could hurt big investors that were anticipating it to fall.Â
Claims online are that gold and silver prices are being repressed by financial bets against them, experts say.Â
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 price even higher. That is partly what helped fuel a massive surge in Gamestop last week.
To be sure, it’s unclear how a short squeeze in silver would affect hedge funds, compared with the impact the short squeeze in stocks like GameStop or AMC had on them. Hedge funds and other investors who have a net long position in silver futures are positioned to benefit from a rise in prices. Money managers have had a net long position on the metal since mid-2019, according to data from the Commodity Futures Trading Commission, Bloomberg reported.Â
Following a record 2020, silver has traded in a narrow range after finishing last year up nearly 50%.
Shares of precious-metal miners that stand to benefit from higher silver prices soared Monday, with Coeur Mining and Pan Am Silver up by more than 15% in premarket trading.
The world’s largest silver-backed exchange traded fund, iShares Silver Trust, rose by more than 9%. On Friday, it reported record net inflows of $944 million.
Contributing: The Associated Press
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