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Agencies
Silver prices surged to a five-month high on Monday, silver-mining stocks leapt and coin-selling websites were swamped as small-time investors piled in to the metal, the latest target of a retail-trading frenzy that has set financial markets on edge.
Organized in online forums and traded with fee-free brokers, such as Robinhood, the phenomenon has driven a 1500% rally in the shares of video game retailer GameStop as the crowd targets assets big fund managers had bet against.
The move into silver, following thousands of Reddit posts and hundreds of YouTube videos suggesting that a rise in the physical price could hurt large investors with bets on it falling, is a foray in to a much bigger and more liquid market.
Spot silver leapt as much as 7.4% in Asia to $28.99 an ounce, taking gains to about 15% since last Wednesday and the price to its highest since mid August.
Silver mining stocks soared in Australia and China and Money Metals, an online exchange for precious coins and bullion, posted an “EXTREME DEMAND ALERT” banner across its homepage, and announced it restricted orders to between $1,000 and $10,000.
“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyze something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.
“This is their big, bold Moby Dick moment,” he said.
Volumes in small miners’ stock in Australia were unprecedented and jumps in some exploration firms, which do not actually produce silver, topped 90%. Bullion dealers had brisk trade.
“Yeah, we’re seeing buying and it’s been sparked by this subreddit,” said Nicholas Frappell, global general manager at ABC Refinery in Sydney, adding such customers liked to buy kilogram bars or smaller because of the convenience.
The Perth Mint said it noticed elevated demand for silver in the United States via online dealers.
The popularity of dabbling in stock markets has grown during the COVID-19 pandemic as volatility, stimulus checks and lockdowns have driven account openings and investment.
The craze hit fever pitch last week when the GameStop pile-on resulted in a “short squeeze,” which turned price gains stratospheric as hedge funds with bets against the stock desperately bought it at high prices to close their positions.
Discussion turned to silver late last week as Reddit posts suggested that higher prices could hurt big banks with large short positions, and said buying easy-to-access exchange-traded silver funds could quickly ramp up the metal’s value.
“(The) gain in silver prices is a very solid lift ... it certainly does suggest that the impact of messaging in social media is becoming much more significant,” said Michael McCarthy, strategist at broker CMC Markets in Sydney.
Global short interest in silver, or the cumulative value of bets it falls in price, is equivalent to about 900 million ounces - just short of global annual production.
Banks and brokers hold most of that, with about 610 million ounces, though it is not clear whether they are net short on the metal or whether their bets offset very big physical holdings.
Silver prices surged to a five-month high on Monday, silver-mining stocks leapt and coin-selling websites were swamped as small-time investors piled in to the metal, the latest target of a retail-trading frenzy that has set financial markets on edge.
Organized in online forums and traded with fee-free brokers, such as Robinhood, the phenomenon has driven a 1500% rally in the shares of video game retailer GameStop as the crowd targets assets big fund managers had bet against.
The move into silver, following thousands of Reddit posts and hundreds of YouTube videos suggesting that a rise in the physical price could hurt large investors with bets on it falling, is a foray in to a much bigger and more liquid market.
Spot silver leapt as much as 7.4% in Asia to $28.99 an ounce, taking gains to about 15% since last Wednesday and the price to its highest since mid August.
Silver mining stocks soared in Australia and China and Money Metals, an online exchange for precious coins and bullion, posted an “EXTREME DEMAND ALERT” banner across its homepage, and announced it restricted orders to between $1,000 and $10,000.
“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyze something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.
“This is their big, bold Moby Dick moment,” he said.
Volumes in small miners’ stock in Australia were unprecedented and jumps in some exploration firms, which do not actually produce silver, topped 90%. Bullion dealers had brisk trade.
“Yeah, we’re seeing buying and it’s been sparked by this subreddit,” said Nicholas Frappell, global general manager at ABC Refinery in Sydney, adding such customers liked to buy kilogram bars or smaller because of the convenience.
The Perth Mint said it noticed elevated demand for silver in the United States via online dealers.
The popularity of dabbling in stock markets has grown during the COVID-19 pandemic as volatility, stimulus checks and lockdowns have driven account openings and investment.
The craze hit fever pitch last week when the GameStop pile-on resulted in a “short squeeze,” which turned price gains stratospheric as hedge funds with bets against the stock desperately bought it at high prices to close their positions.
Discussion turned to silver late last week as Reddit posts suggested that higher prices could hurt big banks with large short positions, and said buying easy-to-access exchange-traded silver funds could quickly ramp up the metal’s value.
“(The) gain in silver prices is a very solid lift ... it certainly does suggest that the impact of messaging in social media is becoming much more significant,” said Michael McCarthy, strategist at broker CMC Markets in Sydney.
Global short interest in silver, or the cumulative value of bets it falls in price, is equivalent to about 900 million ounces - just short of global annual production.
Banks and brokers hold most of that, with about 610 million ounces, though it is not clear whether they are net short on the metal or whether their bets offset very big physical holdings.
