Reddit Is Coming For Silver. A Short Squeeze? Unlikely

Ruben Fields
February 2, 2021

GameStop's Frankfurt-listed shares were down 30% from Monday's close at 143 euros ($172.72) in early trade on Tuesday, after the firm's stock closed at $225 in USA markets. It also raised trading limits on AMC and Koss Corp.

The furore began on Thursday after posts on the r/wallstreetbets Reddit message board - the same one used to spark frenzied buying of GameStop shares - urged investors to buy physical silver. "I don't put more than I'm willing to lose", said Will Callewaert, a 27-year-old Robinhood user who started trading during the coronavirus lockdowns. "This can still lead to sizeable price changes, but those price changes make financial markets more informative, which is beneficial to the real economy".

"Silver is much more liquid compared to stocks, and there are costs to holding the metal", said Benjamin Yeo, head of dealing at Phillip Futures in Singapore, where on Monday silver futures volumes had been surging. Politico, citing people familiar with the matter, reported that Robinhood Chief Executive Vlad Tenev was expected to testify on Capitol Hill on that day.

Due to extreme volatility, and to prioritise the service we give our existing clients, we are not allowing any new positions to be opened on the U.S. stocks GameStop and AMC Entertainment.

The firm is preparing for an initial public offering but it was not clear if it will push forward with those plans.

Traders and analysts poured cold water on the chances of a prolonged rally in silver, saying unlike in GameStop, there is no excessive short positioning and that the options market is fairly well balanced.

Speculative financial investors were already positioned fairly bullishly, dealers said.

Silver for March delivery rose $2.50, or 9%, to settle at $29.42 an ounce.

The Commodity Futures Trading Commission (CFTC) Acting Chairman RostinBehnam stated on Monday that the CFTC is "closely monitoring recent activity in the silver markets", adding that it is "communicating with fellow regulators, the exchanges, and stakeholders to address any potential threats to the integrity of the derivatives markets for silver, and remains vigilant in surveilling these markets for fraud and manipulation".

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"Playing in Tokyo would be very special to me", said the 23-year-old, according to Agence France-Presse (AFP). Osaka , a three-time major champion, said while people she had spoken to were excited, some were anxious .

Representatives for brokerages TD Ameritrade and Robinhood declined to share details about how many clients may have traded GameStop shares on margin.

For comparison, Pan American uses a silver price assumption of about US18.50 an ounce for long-term planning, said Steinmann.

Fresnillo Plc's shares were down 6% in London.

US -listed mining stocks including First Majestic Silver and Pan American Silver also lost between 4% and 17%.

The move in silver came after futures prices last week advanced by over 5%. The near-term bullish breakout in silver prices may be the start of the next leg higher in this multi-year bottoming effort.

The populist trading rally, organized in online forums such as Reddit's WallStreetBets, has helped attract a flood of retail cash into stocks such as GameStop, burned hedge funds that had bet against the stocks and roiled broader markets.

The drops compounded a tough session on Monday for the stocks, with Reddit users gathering in the WallStreetBets forum telling of heavy losses and imploring one another not to sell their shares.

Last week's turmoil caused hedge funds to pull back on their investments by the sharpest degree since February 2009, during the market collapse caused by the financial crisis, according to Goldman Sachs, which provides services such as clearing and consulting to hedge funds.

ELECTRONICSAbout 28% of the world's silver went into electronics previous year - in products like computers, televisions, cell phones, circuit boards, microwave ovens and more.

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