Silver futures (SI=F) surged 10% this morning after retail investors on Reddit shifted focus to the precious metal over the weekend.
“Buy Silveeeeerr! It will be the End Game for J and P!,” wrote mapyman on WallStreetSilver, a subreddit on the social media site.
Shares of silver mining companies were soaring on Monday. Avino Silver & Gold Mines (ASM) shares rose more than 50% by mid-morning. Pan American Silver (PAAS) and Wheaton Precious Metals (WPM) both increased by double digit percentages.
The ETF iShares Silver Trust (SLV) also rose about 10% on Monday morning.
Even though #SilverSqueeze was trending over the weekend, several posts on WallStreetBets say a surge in the precious metal will shift their focus away from GameStop (GME), which rose more than 1600% in January. On Monday morning shares of the video game retailer were down by double digit percentages.
“There is no silver short squeeze happening. NONE. NEVER,” writes u/MarioBuzo.
“I went into the r/wallstreetsilver subreddit and analyzed comments and posts. I found that 80% of them came from accounts mostly created in the last 2 days. Pretty suspect ... who do these people really work for?!” wrote brandobot89.
Some Redditors are concerned the hedge fund Citadel, which invests in the ETF Silver Trust, will benefit from the surge in prices.
For everyone concerned that Citadel will benefit from an increase in $SLV. They won't. Citadel owns 6 million shares of $SLV worth $180 million. With $35 billion in AUM this is a meaningless 0.50% position. Even if silver went to $100 it wouldn't do jack for their returns.
— Reddit Investors (@redditinvestors) February 1, 2021
Short interest on GameStop declined from 114% of free-floating shares in mid-January, to 39% according to IHS Markit data.
Some investors fear a bubble in the markets following short squeezes on GameStop, AMC (AMC) and now silver. However household cash could send the markets higher for the time being, says Goldman Sachs strategist David Kostin.
“Regulatory actions, broker risk limits, or unexpected losses could all dampen the activity and market impact of retail traders, as Thursday’s temporary reversal made clear,” Kostin wrote in a note. “But otherwise, an abundance of U.S. household cash should continue to fuel the trading boom.”
Note: This post was updated at 12:30 p.m.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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