Silver prices rallied by as much as 13% Monday after several retail traders switched their attention to the precious metal away from GameStop Corp, BlackBerry Ltd, and other highly-traded stocks associated with the GameStop frenzy.
The price surge is attributed to a post on Reddit the previous week proposing a short squeeze on the metal, MarketWatch reported.
Most actively traded silver futures rose by more than 10% to $29.63 a troy ounce, the highest level since February 2013, exceeding a modest 0.9% gold price rise, the Wall Street Journal (WSJ) reported. Silver is on the path to one of its largest one-day advances in the past decade, according to the outlet. (RELATED: GameStop, Other Bets Cost Hedge Fund 53% In January Losses)
While “#silversqueeze” was trending on Twitter, retail trading sites cautioned customers over the weekend they could not meet skyrocketing demand for silver bars and coins, reported CNN Business.
Silver is a larger and more liquid market than the individual stock several retail investors purchased in a short squeeze last week, according to Reuters. As many moved to the metal, GameStop shares sank by one third in morning trade and were down 22% at $253 early afternoon.
Share prices of precious-metal miners that would gain from higher silver prices also rose. London-listed Fresnillo PLC, with mines around Mexico, gained 12%, the WSJ reported. Canadian miner First Majestic Silver Corp. rose by 24%, while Pan American Silver Corp. rose 16%.
“The excess liquidity in the system, it is likely to create bubbles not only in silver but also probably commodities and other asset classes going forward,” Commerzbank head of commodities Eugen Weinberg told CNBC, speaking of the price rally.
The ramifications of a #silversqueeze cannot be underestimated. If it’s exposed that there are more paper claims on silver than actual silver, not only would payoff be enormous, but gold would be next. #Bitcoin fixes this.
— Cameron Winklevoss (@cameron) January 31, 2021
Cameron Winklevoss, cryptocurrency firm Gemini co-founder, tweeted out that, “The ramifications of a #silversqueeze cannot be underestimated. If it’s exposed that there are more paper claims on silver than actual silver, not only would payoff be enormous, but gold would be next. #Bitcoin fixes this.”