Silver swept up by GameStop retail frenzy, prices soar

Monitoring Desk

SINGAPORE (Reuters) – Silver prices surged to an eight-year high on Monday, silver-mining stocks leapt and bullion dealers were scrambling as small-time investors piled in to the metal, the latest target of a retail-trading frenzy that has set financial markets on edge.

Organised in online forums and traded with fee-free brokers, such as Robinhood, the phenomenon has driven a 1500% rally in the shares of videogame retailer GameStop as the crowd scoops up assets big fund managers had bet against.

The action in silver, following thousands of Reddit posts and hundreds of YouTube videos suggesting that a rise in the physical price could again hurt large investors with bets on it falling, marks a foray into a much bigger and more liquid market.

Spot silver leapt more than 11% in London to $30.03 an ounce, taking gains to about 19% since last Wednesday and the price to its highest since February 2013. [GOL/]

The feverish buying extended to silver mining stocks in Australia and China and to online dealers, with large U.S. broker Apmex warning of processing delays while it secures more bullion and Money Metals exchange suspending trade until mid-morning Monday.

“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyse something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.

“This is their big, bold Moby Dick moment,” he said.

Volumes in small miners’ stocks in Australia were unprecedented and jumps in some exploration firms, which do not actually produce silver, topped 90%.

“Just do it,” wrote an investor who went by the name of MaDCrazy on Chinese microblogging website Weibo and seemed to sum up the zeitgeist.

“For me, it’s a small gamble without any analysis whatsoever.”

For a graphic on Silver prices versus ETF silver holdings:

FUND FOCUS

The popularity of dabbling in stockmarkets has grown during the COVID-19 pandemic as volatility, stimulus cheques and lockdowns have driven account openings and investment.

Courtesy: Reuters