Even when prices are increasing, they often do so with volatility, and short downward swings can trigger the sell order. What has happened over the last few days, and especially over the weekend, is unprecedented in history. Investors worldwide are buying virtually all the available silver they can get.
Could Redditors Trigger the Silver Squeeze 2.0?
According to this theory, if enough small investors buy into the silver market, the big banks and hedge funds will be forced to cover or buy back their short positions, which would send the price of silver soaring. Unlike gold, it has not posted a new all-time high, nor is it even close to doing so. This has led some players in the precious metals community to argue that its price is being artificially suppressed. 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 who purchase futures contracts choose to settle for cash and rarely take delivery of the actual metal.
How Squeezes Work
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. This victory gained the WallStreetBets forum instant fame and inspired others to try and do the same. To understand the silver squeeze, you first need to know the meaning of a short squeeze.
- For now, I am watching and waiting to see if silver can close decisively above $30.
- There are rumblings of a potential “silver squeeze” ahead as Reddit traders attempt to replicate last week’s GameStop GME short-squeeze in the silver market.
- Basel III could accelerate the efforts of Wall Street Silver, the Reddit group behind the Silver Squeeze.
- They purchased both physical assets and paper silver (e.g. futures contracts).
- 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.
What causes a short squeeze?
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Financial Times
And while this may seem like an over-the-top claim, it’s hard to deny the facts of what happened on what has become known as the “Silver Raid Day” in February 2021. It seems odd that one man posting a picture on X/Twitter could cause the markets to move like this, but when it comes to meme stocks, all bets are off. According to data from S3 Partners LLC, the recent rally in GameStop has cost short-sellers more than $2 billion in just two days. A staggering $1 billion flowed into iShares Silver Trust the Friday before the planned silver squeeze, forcing it to purchase an additional 34 million ounces of physical silver to leave the total stockpile at just over 600 million ounces. Market sentiment reveals the markets inclination toward a specific financial instrument – in this case a share. The below are two potential methods of assessing, timing and interpreting possible signs of an impending short squeeze.
Silver Squeeze 2.0 and Wall Street Silver, Explained
According to Jeffrey Christian of precious metals analyst firm CPM Group, there exists around 3.4 billion ounces of physical silver in bullion form in the world today—plus another 2.0 billion ounces of coinage. As this happens, it’s easy to foresee a significant increase in the price of silver. Many Wall Street https://www.1investing.in/ insiders even bet that this will take place in the near future. Regardless of what ends up happening, there’s no denying that WallStreetSilver has forever changed the precious metals market. The idea behind WallStreetSilver is that the precious metal is seriously undervalued due to market manipulation.
At its peak, Robinhood restricted trades from 50 companies, including GameStop, AMC Entertainment, BlackBerry and Nokia. Basel III could accelerate the efforts of Wall Street Silver, the Reddit group behind the Silver Squeeze. The Silver Squeeze is a concerted effort by these investors to stop the big bullion banks’ silver market manipulation.
In January 2021, GameStop and AMC weren’t the only stocks experiencing major swings fueled by certain Reddit communities. A user in the WallStreetBets forum posted about an attempt to create a short squeeze on silver futures. The short squeeze has demanded the audience from many of the best investors and traders the world over, with some boastful about correct market predictions while others are humbled by the swift yet destructive nature that is the short squeeze. This article will outline the foundational concepts of the short squeeze while providing insight on how to manage and trade around this contentious financial market phenomena. Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses.
Leading the surge in demand was silver’s usage for photovoltaic applications in solar technology, up 64% from the previous year.
If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products. Eric Sepanek is the founder of Scottsdale Bullion & list top 10 entrepreneurs in india Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.