Move over GameStop. Reddit traders are targeting silver now.

Jessica Menton
 
| USA TODAY
GameStop-Robinhood ‘Wall Street bets’ frenzy explainedUSA Today’s personal finance and markets reporter Jessica Menton breaks down how hedge fund day traders are being wrecked by Reddit users.USA TODAYReddit traders have set their sights on a new target: Silver.Futures contracts for the precious metal jumped to their highest level in almost eight years Monday, extending recent gains as the Reddit-fueled buying frenzy spilled over into the commodities market.Silver futures jumped 11% on Monday to about $30 per ounce – their highest level since February 2013 – following strong gains over the weekend. The rally comes after silver prices advanced more than 5% last week.On Twitter, #silversqueeze was trending as investors turned their attention to the latest market strategy to emerge from the “WallStreetBets” forum on Reddit.Silver has rallied in recent trading days after users on the forum posted about executing a “short squeeze” similar to ones that drove recent gains in stocks like GameStop and AMC. Where’s my smart speaker? Shoppers face shortages of cars, shirts and smart speakers amid COVID-19 shipping delaysA fight on Wall StreetM: A fight is raging in the stock market: Should you worry about your 401(k)?The online army of Reddit traders have over the past week rallied to defend out-of-favor companies such as struggling videogame retailer GameStop and theater chain AMC Entertainment, defeating hedge funds that had bet the shares would fall by selling them short, in a stunning reversal of financial power transfixing Wall Street.To be sure, the so-called silver squeeze may not last long, some experts say. It’s caused division on the “WallStreetBets” Reddit forum, with some users arguing that they should keep targeting GameStop shares because Citadel Securities, the electronic-trading firm owned by hedge-fund billionaire Ken Griffin, is thought to benefit from a rise in the metal since it is a major holder of iShares Silver Trust, the world’s largest silver exchange-traded fund. “CITADEL IS THE 5TH LARGEST OWNER OF SLV,” a WallStreetBets user wrote Sunday, referring to the ticker symbol for iShares Silver Trust. “IT’S IMPERATIVE WE DO NOT ‘SQUEEZE’ IT.”The iShares Silver Trust, a BlackRock exchange-traded fund tracking the metal, rose by more than 9% on Monday. It reported record net inflows on Friday of $944 million.It’s unclear how a short squeeze in silver would affect hedge funds, compared with the impact the short squeeze in stocks like GameStop or AMC had on them. Hedge funds and other investors who have a net long position in silver futures are positioned to benefit from a rise in prices. Money managers have had a net long position on the metal since mid-2019, according to data from the Commodity Futures Trading Commission, Bloomberg reported. The silver market frenzy extended to physical demand for the metal, with coin dealers reporting delays in deliveries as they were overwhelmed by demand. A big move in the physical price of silver could hurt big investors that were anticipating it to fall. Claims online are that gold and silver prices are being repressed by financial bets against them, experts say. If the price goes up enough for an extended period of time, the thinking goes, the big investors who bet against gold and silver would eventually have to reverse those trades, buying back in – and pushing the price even higher. That is partly what helped fuel a massive surge in GameStop last week.Following a record 2020, silver has traded in a narrow range after finishing last year up nearly 50%.GameStop-Robinhood stock revolution: Not a secure retirement planShares of precious-metal miners that stand to benefit from higher silver prices soared Monday, with both Coeur Mining and Pan American Silver up by more than 15%.Contributing: The Associated Press


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