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Summary
- The Reddit-inspired investors piled on to silver as the new week started. The precious metal was up by nearly 9 per cent within minutes with futures topping $29 an ounce.
- The online retailers such as Apmex dealing in silver were overwhelmed by the extraordinary demand for bars and coins over the weekend and were unable to process orders until Asian markets open.
This time Wall Street bet traders have targeted the precious metal silver. Users on the Reddit forum Wall Street bets have been making a case for buying silver to try and push its prices higher. Notably, prices of silver are often manipulated.
The Wall Street bet traders have underpinned their hopes on prices of silver, as the commodity is undervalued. Moreover, the global automotive industry is undergoing a transformation to reduce the carbon emissions and therefore, are investing heavily in electric vehicle technologies. Notably, silver is the prime ingredient in developing batteries for electric vehicles.
The Reddit-inspired investors piled on to silver as the week opened. The precious metal was up by nearly 9 per cent within minutes with futures topping $29 an ounce. The online retailers such as Apmex dealing in silver were overwhelmed by the extraordinary demand for bars and coins over the weekend and were unable to process orders until Asian markets open.
In addition, the largest exchange-traded product tracking silver, BlackRock Inc.’s iShares Silver Trust recorded an unprecedented net inflow of $944 million on Friday. According to the WallStreetBets forum, silver was declared as the biggest short which encouraged investors to pile into the silver and related instruments.
Also read: How GameStop short squeeze roiled Wall Street
All the traders closely following the market recently, must have come across a share of a computer games retailing business soaring. The GameStop (NYSE:GME) stock has been the hottest stock of the year so far as it delivered a gigantic price return of 1,625 per cent. Interestingly, the business has not been doing well in the wake of the pandemic. The unprecedented returns were reportedly powered by the Reddit force.
It is Reddit versus Wall Street. A group of investors known as WallStreetBets on a social aggregator and discussion forum Reddit influenced the price of the gaming business and pushed it prices up by more than 1,600 per cent, despite the hedge fund managers betting on the stock to go down as the business had struggled to get the footfall in the wake of coronavirus-induced lockdowns. This could be a perfect case study on short trading.
Work to do for Investment managers
Prices of gold and silver are different from stocks. However, they are often manipulated by financial institutions to cover real inflation. The fund managers must gauge the impact of Reddit-fuelled volatility on their portfolio of assets as silver is being targeted by the retail frenzy to create a short squeeze.
What should you do
If you wish to capitalise on the silver boom, you can probably take exposure in the precious metal by buying silver stocks. The silver stocks would resonate to the prices of actual Silver and would also save you from any undue risks.
