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WallStreetSilver and the Silver Squeeze: What You Need to Know
Gamestop and AMC certainly dominated news in the investing world during the first half of 2021. If you paid attention to what was happening on Reddit, though, you likely also heard of WallStreetSilver and the silver squeeze. “When there isn’t 100% agreement on a trade, can they still have these effects on the market? You need almost perfect consensus, and even then certain markets like silver can move but you won’t see what we saw in stocks like GameStop,” Mayfield added. Some of these smaller traders believe the hedge funds that were pillaged last week are behind the surge in silver. Communications on messaging boards claim hedge funds have now become active on Reddit anonymously, attempting to drive them out of GameStop bets and into silver, but only after hedge funds had taken huge positions.
However, reddit traders need to understand that the silver market is much more liquid than individual stocks like GameStop GME , AMC and Blackberry, which caused real pain for some prominent hedge funds last week. 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. The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
After all, this type of analysis helped me spot Bitcoin’s recent run-up ahead of time. Right now, silver futures are trading in a range between the $22 support level and the $30 resistance level that formed at the peak in early-August. If silver can push above $30 on strong volume, the odds of an even more extensive bullish move will increase. Additionally, one of the most major uses of silver is in the industrial world. Many of the home electronics you have probably have the metal in there. And while WallStreetSilver may focus on overcoming price manipulation, increased sales of electronics mean the demand will rise regardless.
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- ” emojis are certainly exciting, they’re not really the crux of what’s going on in the movement.
- Buying during the pandemic certainly played a big role, but it wasn’t until Reddit investors jumped in that the sale of bullion jumped over 250 percent.
- 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.
- Many smart investors have recognised that this is a dangerous path (for the stability and survival of our currencies and fixed income assets (bonds, cash deposits)) but also that it will provide an outsized investing opportunities.
Traders have also poured into mining firms and coin-selling sites warn of delays in delivering silver amid unprecedented demand. “The Silver Squeeze is a hedge-fund coordinated attack so they can keep fighting the $GME fight,” one user posted on r/WallStreetBets (GME is GameStop). Some of these were only temporary measures, and many directly targeted the Hunt brothers.
WallStreetSilver and the Silver Squeeze: What You Need to Know
National Securities Clearing Corporation (NSCC) asked the company to put up $3 billion in collateral, forcing the app to curb some stocks. This demand was later lowered and the company raised over $1 billion from investors. 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 using the yield spread to forecast recessions and recoveries industrial needs, enormous increases in the price of silver could be on the way. WallStreetSilver is right about short selling having a major effect on the price of any asset.
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Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment. Nonetheless, it would be unwise to underestimate the purchasing power of retail investors, and the idea of this was clearly demonstrated last week. The task of a short squeeze may be a difficult one, but the fact is that hedge funds are against the ropes while retail traders are throwing the big hooks. Buying physical silver or shares of silver stocks is a way to be involved in the so-called “Silver Squeeze 2.0.” When more investors buy a stock or commodity, short-sellers usually need to sell shares to cover their losses.
But should some reflexivity (positive feedback loop) kick in given the amount of shorts, price could go even (much?) higher. There is a massive amount of naked short positions in the silver market. They have sold the silver contracts for the silver they never had. And when the first wave of silver buying by small investors has caused the price to spike in the last days of January, they have dumped even more paper silver shorts on the market to crush the price. If u s eur link crossword clue, crossword solver last week’s trading activity is anything to go by, the price of silver is likely to remain highly volatile as traders will be keeping an eye on the “Silversqueeze” hashtag in their ongoing bid to rival Wall Street’s investors. As this happens, it’s easy to foresee a significant increase in the price of silver.
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This doesn’t mean manipulation isn’t taking place, though, and the saga of the Hunt brothers proves this is something that can happen. And even if you were to ignore all these facts, it’s impossible to overlook the dwindling supply of silver. Scrolling through the many threads in the Reddit group reveals what one might expect from any online community.
I still believe that these safe-havens will thrive in the years to come as central banks continue to flood the world with liquidity in an attempt to prop-up the debt-ridden global economy. But there is also a short term dynamic that is expected to trigger a big rise in price of silver during the coming months. Given that silver prices took out the $30 price level earlier today, the next major psychological resistance is $35 and $40. Speaking from a technical perspective, silver prices are extremely overbought.
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 most profitable investment 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 $32 billion. Some silver market analyst are expecting more than 100% rise in the price of silver that could be in front of us in the next months. That will lead the price of silver over the old record highs around 50$/oz which seems appropriate in the time when almost all other financial assets already are on the records and when there seems to be an emerging insatiable demand for silver.
While gold is expected to be of great importance in a worst case scenario it doesn’t possess qualities to perform nearly as well as silver in other better macro scenarios. So gold may be robust but it is not anti-fragile, while silver is! And silver also looks relatively undervalued compared to gold if history is our guide. While rates are not nominally negative in the USA, the real rates (nominal rates minus inflation) are very negative. Prior to joining Forbes, Rob covered big data, tech, policy and ethics as a features writer for a legal trade publication and worked as freelance journalist and policy analyst covering drug pricing, Big Pharma and AI. He graduated with master’s degrees in Biological Natural Sciences and the History and Philosophy of Science from Downing College, Cambridge University.
The rally comes after silver prices advanced more than 5% last week. As The Motley Fool reported on general short squeezes, “For stocks with truly massive amounts of short interest relative to the volume of available shares, this effect can snowball for some time, leading to tremendous volatility and huge spikes in the share price.” Robinhood’s faced major backlash and several lawsuits for restricting trading of some meme stocks.
Since the COVID’s crashed the financial markets in the March 2020, governments and central banks have been stimulating (fiscally and monetary!) pedal to the metal, at the rates that nobody ever imagined possible. The massive reduction in silver used in American coins is a major reason behind this decrease. If the U.S. government suddenly had a need for silver at its 1970 levels, they’d have to purchase over 300 million ounces to meet it. Because of these decreases, many people called it history’s “greatest theft in the silver market.” The raid that found its roots in WallStreetSilver intended to push back against price manipulation.