After brokerage platforms barred day traders from buying into a number of heavily shorted stocks like GameStop (NYSE: GME), the retail investment community started to eye the silver markets, lifting related precious metals and mining sector exchange traded funds.
Posts on the infamous WallStreetBets subreddit goaded members to pile into the iShares Silver Trust (SLV), the largest silver-related ETF, arguing that banks have been manipulating silver prices and keeping the precious metal’s price artificially low to mask a shortfall in physical supplies, Bloomberg reports.
The taunts seem to have worked. SLV jumped 5.6% on Thursday and was up another 1.5% on Friday. Meanwhile, the ETFMG Prime Junior Silver Miners ETF (NYSEArca: SILJ) surged 10.0% on Thursday and gained another 2.9% on Friday.
The rallying cry of the extended short squeeze in silver markets seems to have picked up momentum.
“There’s a short squeeze going on in silver. The ‘hoodies are all rolling into silver and the party is on,” Phil Streible, chief market strategist at Blue Line Futures LLC, told Bloomberg. “All those other stocks like GameStop and AMC, they’re dumping because they’ve been restricted, and they gotta go into other short opportunities and silver is an easy identifiable target.”
Conspiracy theorists have for years warned of big banks and governments colluding to mask inflation.
“Silver Bullion Market is one of the most manipulated on earth. Any short squeeze in silver paper shorts would be EPIC,” according to a WallStreetBets post. “We know billion banks are manipulating gold and silver to cover real inflation. Both the industrial case and monetary case, debt printing has never been more favorable for the No. 1 inflation hedge Silver.”
Seasoned market observers see little sense in the surge in silver prices, with little progress in fundamentals to support the rally.
“This isn’t predicated on any global events, it’s just people on a message board putting all their guns towards the precious metals markets,” Bob Haberkorn, senior market strategist at RJO Futures, told Bloomberg.
For more information on the precious metals market, visit our precious metals category.
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