Daily Market Recap - Reddit Traders Back Again, This Time For Silver

Silver is seeing its price explode to an eight-year high, with WallStreetBets speculators once again on the move. The precious metal went up over 8 percent on Monday as day traders drive up prices in hopes of replicating the GameStop strategy.

The ounce has been flying away for a few days, carried by individual American speculators, who buy gold massively from the poor in order to boost its price and penalize institutional investors. After GameStop, the soap opera of arms deals between small traders and institutional managers continues.

On the subreddit dedicated to trading, r/wallstreetbets, the standard-bearer of speculation by individual investors, a recent message assured that “silver is the most important asset sold short in the world”, encouraging readers to invest massively via money-backed exchange-traded funds (ETFs). However, the global money market is out of all proportion to that of Gamestop shares...

“We alerted as early as Thursday and I already had the opportunity to talk about it on Friday, after Gamestop, it seems that WallStreetBet's new target is silver metal. It all started from a message from one of the community members, ”TheHappyHawaian“, who mentioned the possibility of buying ETFs on silver and forward contracts to request delivery and create a short squeeze on this metal”, reports Louvet a commodity analyst.

For years, rumors of manipulation, particularly by American banks, have been circulating in the market (short selling to prevent the market from rising). Figures to date do not corroborate this assertion but there are some banks that are indeed short on the metal. Indeed, if a bank is an issuer of an ETF for which it guarantees the existence of physical metal money in its vaults for any purchase, it must sell the money forward against this position.

(Chart Source: Tradingview 01.02.2021)

Whether or not Main street traders will have enough momentum to push forward in the silver market remains uncertain. The bigger question is which asset will be up next on their radar, gold perhaps？

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.