All this is happening while multiple demand forces are building. Huge forces are going to keep pushing silver higher for years to come.
The second silver squeeze or ‘silver squeeze 2.0’ took place on May the 1st – although this fell on a Saturday so much of the price action was captured on May the 3rd. Looking at the chart below this attempt had a more muted effect initially, as price action jumped less than it did the first time around and witnessed significantly lower volume, too. Speaking from a technical perspective, silver prices are extremely overbought. The Relative Strength Index on the daily time frame has reached near $70, which means a pullback is likely. If there is a pullback, prices may retrace to the $27 to $28 price level. A Reddit subgroup called WallStreetBets sent out a call-to-action to buy silver on January 28th.
Silver Squeeze – The Meme Stock After-Thought that Didn’t Quite Take Off
The task of a short squeeze may be a difficult one, but the fact is that hedge funds are against the ropes while retail traders are throwing the big hooks. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.
Tax treatment depends on your individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. But if I start getting a buzz from buying stocks, shares, silver or whatever else, then I’ve got the beginnings of a real problem. And if there are no sound investments on the day I need that dopamine or adrenaline hit? For some reason, though, talk of a silver squeeze hasn’t subsided.
The big bull run started on January 28, when the silver open price was $25.26 and the low was $24.86. On Friday, January 29, silver prices touched a high of $27.65, and this bull run pushed the silver spot price above $30 today. In simple words, silver has surged nearly 19% since Thursday last week. In addition to this, today’s one-day percentage gain is the biggest since 2008.
It’s a well-known fact that silver and gold can help you hedge against inflation. The key is purchasing gold and silver before the steep premiums that could culminate as a result of Basel III, the #SilverSqueeze, and inflation. If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products. “Temporarily out of stock.” – That’s the message most hopeful physical silver buyers have been getting since the last days of January. Odds are bullion dealers going to have a tough time keeping any silver in stock. The value of your investments can go down as well as up and you may get back less than you put in.
- Thereafter, the WallStreetBets community decided to turn their sites towards the silver market in an attempt to raise the price of a market that has long been rumored to be intentionally suppressing prices.
- The first and second silver squeezes were said to have been conducted via the world’s largest silver Exchange Traded Fund (ETF), iShares Silver Trust, which has a $15.97 billion market cap at the time of writing.
- The second silver squeeze or ‘silver squeeze 2.0’ took place on May the 1st – although this fell on a Saturday so much of the price action was captured on May the 3rd.
- These individual investors are characterized by the desire for high gains and the willingness to take on a high degree of risk.
The price of silver rose less than $4 between Friday the 29th of January and Monday the 1st of February. Thereafter, for the remainder of February prices actually dropped below the spike high but remained above the pre-squeeze levels. Thousands of young investors are meeting up on internet forums to share information and coordinate their financial plans and actions. For the first time in history, retail investors are not acting independently, but as an organized group. This allows them to concentrate their positions and influence the stock market like never before. Each may not have a large amount of capital, but together they are a force to be reckoned with.
Unfortunately, the silver market is quite opaque, and we have no way of knowing whether these allegations are true or not. But as far as the people on the newly formed “WallStreetSilver” forum are concerned, this is indeed the truth, and they are determined to expose it. This is exactly what happened recently to the shares of GameStop, an American video game retailer. The company has struggled during the COVID-19 pandemic, and its revenues have been declining.
It’s entirely possible the idea of a silver squeeze could force prices up. In a few weeks, when the short squeeze story gets stale, and everyone moves on to the next shiny bauble? The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested.
What is a silver squeeze?
Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples. DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material. J.P. Morgan Chase is one of the largest traders of precious metals, so the Reddit user mentioned taking on the banking giant. The person also noted silver stocks available to retail investors—First Majestic Silver Corp and the iShares Silver Trust ETF.
It was enough to cause the Comex to raise silver margins by 18% after just two up days. ” emojis are certainly exciting, they’re not really the crux of what’s going on in the movement. Many of those involved say they want nothing more than for the price of silver to return to a fair and accurate level. In fact, we could make an argument that WallStreetSilver single handedly created the current drive to buy physical silver.
What Is the Silver Squeeze?
One look at Google Trends, though, shows that silver overshadowed the yellow metal for an entire week. Rotbart & Co. are bullish on silver in the medium to long term and believe it https://www.dowjonesrisk.com/ has much more room for further price appreciation due to the above reasons and to its role as a safe-haven asset. Silver became the target of a short squeeze, as we explain here.
Buying during the pandemic certainly played a big role, but it wasn’t until Reddit investors jumped in that the sale of bullion jumped over 250 percent. While this high level of interest has waned a bit, people have remain focused on WallStreetSilver, the Silver Raid and the potential impending silver squeeze. If you haven’t heard of these issues and events, the following guide will help you understand what’s going on and what it could mean for you. For a while in February, silver was the talk of the town in the precious metals world. Internet searches related to buying gold had long dominated similar searches for silver.
The Silver Short squeeze as retaliation against Wall Street
Regardless of what ends up happening, there’s no denying that WallStreetSilver has forever changed the precious metals market. People can argue over whether the price of silver will skyrocket, but it’s hard to deny that market manipulation exists. Even if there were no underlying “bad acts” on February 2, 2021, the Hunt brothers have already proven that the government and heads of exchanges can change rules when they want to.
However, if that stock’s price increases drastically, it can cause short sellers to lose money by having to buy back at the higher prices to minimize losses. The silver squeeze is caused by investors buying up silver in an attempt to drive up prices and “squeezing” the investors. It is too soon to determine whether or not the ‘silver squeeze’ movement will have any long-lasting impact on the silver market. Traditional silver stackers, who have been accumulating silver bullion for decades, are getting together with young millennials, for whom the concept of hard currency is new and fresh. Even if this movement cannot affect the price of silver, it has already been successful in raising a new generation of precious metal advocates and fans. Nonetheless, it would be unwise to underestimate the purchasing power of retail investors, and the idea of this was clearly demonstrated last week.