Reddit retail traders have once again taken a position against hedge funds and money managers. The hashtag “Silversqueeze” is top trending on social media channels, including Twitter and Reddit, and retail traders are buying silver like there is no tomorrow. Silver crossed above the $30 mark earlier today, and silver ETFs experienced a massive inflow on Friday. However, reddit traders need to understand that the silver market is much more liquid than individual stocks like GameStop
3D illustration of silver bullion bars over a blue background with growing chart. Commodities … [+]
Silver Prices
Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses. The big bull run started on January 28, when the silver open price was $25.26 and the low was $24.86. On Friday, January 29, silver prices touched a high of $27.65, and this bull run pushed the silver spot price above $30 today. In simple words, silver has surged nearly 19% since Thursday last week. In addition to this, today’s one-day percentage gain is the biggest since 2008. The below silver chart shows the one-day percentage change in price.
Silver has seen the biggest one-day surge since 2008. The move in silver is very much supported by … [+]
Biggest Money Inflow For Silver ETF
The conversation on the Reddit forum WallStreetBets is that retail traders are going to pour a large sum of money into silver ETFs that it will not only move the silver prices enormously, but it will also bring the games played by hedge funds out to the light, showing their price manipulation practices.
Blackrock’s
Scope For Short Squeeze
Silver is different in many ways from individual stocks like GameStop, AMC, Blackberry and many more. For instance, having a short squeeze in silver could be difficult because it’s a much deeper and more highly liquid market. For instance, GameStop’s market cap was $1.4 billion in mid-January, but this increased 16 times over when Reddit traders started to talk up the stock. If we look at the quantity of silver stored in London vaults, it is nearly 1.08 billion ounces of silver, according to the LBMA data released back in November 2020. This puts the silver valuation stored in these vaults to almost $32 billion.
Nonetheless, it would be unwise to underestimate the purchasing power of retail investors, and the idea of this was clearly demonstrated last week. The task of a short squeeze may be a difficult one, but the fact is that hedge funds are against the ropes while retail traders are throwing the big hooks.
How High Can Prices Go?
Speaking from a technical perspective, silver prices are extremely overbought. The Relative Strength Index on the daily time frame has reached near $70, which means a pullback is likely. If there is a pullback, prices may retrace to the $27 to $28 price level.
Bulls are very much in control of overall momentum. Given that silver prices took out the $30 price level earlier today, the next major psychological resistance is $35 and $40.
Final Word
If last week’s trading activity is anything to go by, the price of silver is likely to remain highly volatile as traders will be keeping an eye on the “Silversqueeze” hashtag in their ongoing bid to rival Wall Street’s investors.
