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Summary
- Silver prices continued its forward march assisted by Reddit-led trends.
- Prices hit five-month high at more than $29.9 an ounce.
- Unlike stocks, metal supplies can be limited, leading to some price control.
A global surge in silver prices refused to abate on Monday fueled by the frenzy traders on Reddit. After targeting some less-popular stocks for short-squeeze last week, raising unusual volatility in the North American markets, these traders appeared to have turned their eyes on commodities.
The prices of precious metals, especially silver, have seen an unprecedented rise in the markets over the past few days after witnessing an identical price-havoc in the stock exchanges.
Silver Prices Continue to Surge
Silver futures prices rose by over 4 percent to more than $29.9 an ounce at around 7:30 am ET, Monday – the highest gain since mid-August as individual traders and silver-miners rushed in droves to stock up these metal futures.
A similar rush had led to high volatility in the stock markets in mid-January, triggered by a Reddit trading forum, after it tried an intentional short squeeze to spike the prices of some stocks such as GameStop, and AMC Entertainment.
Blackberry and Nokia as well as some penny stocks had also seen unprecedented price swings before stabilizing. Many brokerages were forced to restrict trading in these stocks to curb market volatility. But this frenzy appears to have now returned, albeit this time, in the commodities market.
Global Impact
The upward trend of metal futures is not limited to the North American markets. Australian mining farms have also witnessed price volatility in the local markets over the past few days.
For instance, shares of Argent Minerals, Boab Metals, and Investigator Resources in Australia saw more than a 15 percent increase in value as small-time traders rushed en masse to pick up the scrips.
Others, such as coin-selling websites, have also reported increased demand for silver.
Silver futures prices for February 21 delivery closed at $28.820 on Friday, which was an increase of over 3.83 percent from the previous close.
Gold prices also saw limited gains early Monday morning, rising by 0.46 percent to $1,866.50.
Price Swings Hit Hard
Despite the cooling measures, abnormal fluctuations in the market have hit some firms hard on Wall Street. Melvin Capital has reportedly lost over 53 percent due to market upheavals in January.
It had forecast that GameStop stocks would fall further, but retail investors defied that warning and rushed to buy the stock that drove its prices to $325 at close on Friday.
However, unlike the abundance seen in stocks, silver supplies can be limited in the market, and thus provides some limitations to the extent its prices can go.
