Silver has soared since last Thursday as the attention of Reddit retail investors shifted from game stations to silver last week. Silver soared more than 8% to more than $29 at one point in early trading on Monday, the biggest increase since 2013 and the highest since August last year.
The surge in silver has spread from the futures market to the physical market, leading to a surge in related stocks and ETF. And experts say the squeeze of short sellers on silver by retail investors in US stocks is likely to push silver up to $40-$50 in the future.
Silver's extraordinary rise comes from a hot post from Reddit last Thursday. According to popular posts, the prices of silver and gold have been manipulated by a large number of banks, and the inflation-adjusted price of silver "should be $1000, not $25". The post calls on everyone to squeeze short positions and restore silver to its "real price".
A large number of comments like this have spurred silver to continue to strengthen and drive demand in the physical market. Over the weekend, several major US retail websites for precious metals even suspended the sale of silver products, including Money Market, SD Bullion, JM Bullion, Apmex and Wal-Mart North America, as demand fell short of supply. They all said they could not accept new orders until the silver Asian market opened on Sunday night in North America.
The premium on American silver eagles has risen from the normal level of $2 to nearly $5 in the past three days, according to (Gainesville coins), a coinage company in Gainesville, Florida.
The surge in silver has also pushed up other related assets. On Thursday and Friday, North American silver miners Coeur Mining and Pan am silver (Pan American Silver) rose 16.9 per cent and 14.7 per cent, respectively, while Asustek silver trust (iShares Silver Trust) rose 6.7 per cent.
On Friday, the US Silver ETF "SLV" recorded inflows of nearly $1 billion, almost double its record high in 2013.
Monday's surge in silver has pushed up Australia's small mining stocks. Australian small mining stocks Argent Minerals, Boab Metals and Investigator Resources are all up more than 15 per cent as of press time.
Retail investors in US stocks are clearly enthusiastic about silver. On Sunday night, the WSB section of the Reddit forum has a number of active topic posts devoted to silver. At the same time, the phrase "# silversqueeze" mentioned in Reddit's hot posts to squeeze silver bears has also become a buzzword on Twitter.
Kyle Rhoda (Kyle Rodda), an analyst at brokerage firm IG Markets in Melbourne, said: "now there is a strange situation, Reddit fans have turned their attention to a bigger whale, trying to promote some kind of short squeeze in the silver market."
Cameron Winklevoss, co-founder of cryptocurrency company Gemini, tweeted: "the consequences of # silversqueeze should not be underestimated. If there is more demand for paper silver than physical silver, not only will it cause huge growth, but gold will be next. "
Phil Streible, chief market strategist at futures broker Blue Line Futures, said that under the current situation, it is not impossible to target silver at $40 to $50.
"what we are seeing here is that people are targeting these high-beta, high-shortage products, as we saw on GameStop last week," Streible said. "they have moved to the silver market and what they are trying to do is to make the market in short supply and thus push up prices."
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