Spot silver shined on Thursday night after the release of the U.S. GDP data, extending its gains all the way to 6%. Spot Gold, on the other hand, performed much less well, rising just 1%.
The motivation for this silver surge may not be the U.S. GDP data, but the U.S. retail investors on the Reddit forum that has recently brought the financial markets to a fever pitch.
As you can see from the Reddit forum, a user posted on the forum mentioning the silver ETF iShares, and then silver surged all the way up 6%.
One user on that forum said, “There’s no way they’re going to suspend or remove trading in silver, it’s an opportunity.”
A Reddit forum user even posted that silver should reach $200 per ounce, taking Inflation alone into account.
A user on WallStreetBets named jjalj30 also made a post last night that
The silver market is one of the most manipulated markets in the world. We know that billions of banks are manipulating gold and silver to cover up actual inflation. The printing of debt is good for silver, both in the industrial and monetary realms. The inflation-adjusted price of silver should be $1,000, not $25.
Subsequently, Zero Hedge also posted that the short-selling wave of Reddit retail investors may have moved to the precious metals market.
Reddit has now become a magical site where any asset that is mentioned seems to magically rise.
US stock market: WSB concept stocks triggered multiple intraday meltdowns today, with American Airlines Group (AAL) surging over 80% at one point in the pre-market. Several brokerages reported technical glitches due to excessive trading volume.
Hong Kong, China market: Reading Group once soared 27%, the biggest gain since doubling on its first day of trading in 2017; short positions in the stock accounted for 22% of Reading Group’s free float as of Jan. 15.
Australian market: highly shorted Unibail-Rodamco-Westfield jumped 18% at one point; shares of miner GME Resources jumped 60% at one point due to the similarity of its name to GameStop’s ticker symbol.
Japanese market: E-commerce giant Rakuten rose over 6%. (GameStop is also an e-commerce company)
Indian market: GameStop accounted for 15% of total trading volume on an Indian platform that trades U.S. stocks.
Silver: Retail investors turned to silver after brokerage firms restricted trading in WSB concept stocks. As of writing, the silver ETF-iShares was up over 5% and spot silver was up 6% at one point.
Cryptocurrency: Reddit had mentioned the cryptocurrency Dogecoin, while #Dogecoin had made it to the fifth place in the US regional Twitter trend. As of this writing, Dogecoin surged over 60%.
It is worth noting that retail investors on Reddit have “switched” to other markets perhaps because several stocks that were previously subject to frenzied speculation have been restricted from trading. Fidelity Holdings released an announcement saying that GME and AMC stocks have been banned from opening positions (closing positions are not affected) due to upstream restrictions, and a number of US-based brokerages have also banned some of these stocks from being opened for trading. Influenced by such stocks, upstream trading channels are congested and some orders are stuck, so it is recommended to participate with caution.
Beware of U.S. regulators
As the wave of retail short selling in the U.S. intensifies, investors and eaters alike should keep an eye out for moves by U.S. regulators.
Democratic Senator Elizabeth Warren has urged regulators to take action and asked the SEC to crack down on these crazy practices. The SEC has also said it is closely monitoring volatility in the options and stock markets.
In a statement on Wednesday, the SEC said.
“Given our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with other regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants.”
Now as the wave moves from the stock market to the precious metals market, U.S. regulators are likely to accelerate their measures. When that happens, a new storm is feared under the regulatory stick.
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