Silver jumps 11%, the most in 11 years as Reddit traders try their squeeze play with the metal

MARKETS

PUBLISHED SUN, JAN 31 20217:23 PM ESTUPDATED MON, FEB 1 20218:58 AM EST

Jesse Pound

@JESSERPOUND

 


KEY POINTS

  • The sharp move higher builds off gains for silver and silver-related equities late last week


  • The spike in demand for silver appears to be related to retail traders in the Reddit forum WallStreetBets, which has helped drive trading activity in heavily shorted stocks like GameStop and AMC Entertainment in recent weeks.

 

 

TooTH_PIK | Getty Images

 

 

Futures contracts for silver surged higher early Monday morning as the Reddit-fueled boom in highly shorted stocks appears to be spilling over into the metals market.

Spot silver prices jumped 10.4% to $29.70 an ounce shortly before 8:30 a.m. ET.. If this holds, it would be the biggest one-day pop in silver on NYMEX since a 13% spike in March 2009. The metal briefly hit $30.03 to register its highest level since Feb. 2013 before paring some of its gains.

The sharp move higher reflected the biggest move for silver futures since at least 2013 and extended gains for silver and silver-related equities late last week.

The iShares Silver Trust, an ETF that retail investors can easily buy that seeks to track the price of silver, jumped more than 9% in premarket trading. It popped 6% last week.

Silver mining stocks Coeur Mining and Pan American Silver surged 30.3% and 13.8% respectively in premarket trading. The two rose 16.9% and 14.7%, respectively, on Thursday and Friday.

The spike in demand for silver appears to be related to retail traders in the Reddit forum WallStreetBets, which has helped drive trading activity in heavily shorted stocks like GameStop and AMC Entertainment in recent weeks.

The forum had multiple active threads dedicated to silver on Sunday night, and the phrase ”#silversqueeze” was also trending on Twitter.

“It’s a very different target, but the fact that you can move silver, such a large market, is an indication to everybody that they have to take these new technicals seriously,” said Allianz chief economic advisor Mohamed El-Erian on “Squawk Box.”

The silver discussion on Reddit was not all in favor of buying the metal and related equities, with some users arguing that the “silver squeeze” was an attempt to distract from the trading in GameStop and others. Other posts were in favor of bidding up silver, and one user on Friday night referenced the Hunt brothersattempt to corner the silver market in 1980.

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