Silver tumbles 7% from 8-year high as day-trader rally runs out of steam – GameStop and other hot stocks are also sliding

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Silver prices soared on Monday but faltered on Tuesday

The silver price tumbled 7% from an 8-year high on Tuesday, as efforts by retail traders to jack up the price fizzled out, and other day-trader targets such as GameStop slumped.

On Monday, silver rose as much as 13% to above $30 an ounce, as amateur investors piled into the market, causing exchange-traded funds to surge and some online retailers to restrict transactions.

The rally in silver appeared to be a continuation of the day-trading frenzy that drove GameStop shares 400% higher last week, with the hashtag #silversqueeze trending on Twitter.

Yet the rally lost impetus on Tuesday morning, with the benchmark silver futures price sliding 7.2% to $27.30 an ounce as of 9.45am ET.

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CME Group, which runs the Chicago Mercantile Exchange, increased the margins investors need to post to trade silver futures by 17.9% on Monday, which analysts said tamped down activity.

BlackRock’s iShares Silver Trust exchange-traded fund fell sharply, opening sharply lower on Tuesday at around $25.28 after closing on Monday at $26.76.

Analysts said the rapid turn-around in the price of silver showed the difficulty retail traders face in trying to drive up the price.

Part of the energy behind the silver rally on Monday was that day traders on Reddit and elsewhere had encouraged each other to buy up the metal in the belief that major financial institutions are betting against it.

Many members of the Wall Street Bets forum criticised the idea of targeting silver, however, saying the focus should remain on GameStop. Some noted that major Wall Street banks, and the hedge fund Citadel Advisors, were the biggest holders of the iShares Silver ETF.

Read More: Buy these 4 stocks poised benefit from a spike in silver prices, says RBC Capital Markets – including 2 set to soar 73%

Bank of America strategist Michael Widmer said in a note there were signs that silver purchases “in recent days have come from both the retail and institutional space.”

Adrian Ash, director of research at precious-metals platform BullionVault, told Insider that the sheer size of the silver market was a major problem for day traders thinking of targeting the metal.

“While silver is much more volatile than gold – with wholesale volumes only one-seventh the value – [it’s] still massively larger than GameStop at $8 billion per day,” Ash said.

GameStop shares slid 42% at the opening bell on Tuesday morning to around $125.00 as the retail frenzy appeared to peter out. Movie theater chain AMC was down around 40% to around $8.

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Silver spikes 13% to 8-year high as Reddit day traders turn their buying power towards a fresh target

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  • The price of silver jumped as much as 13%, to $30.35 per ounce, on Monday as amateur investors piled in. The metal hovered near an eight-year high.
  • The so-called silver squeeze follows the Reddit-driven surge in GameStop shares last week.
  • But the rally sparked controversy on Reddit, with users saying GameStop should remain the target.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The price of silver on Monday jumped as much as 13%, to $30.35 per ounce, hitting an 8-year high. The surge pushed up shares of silver-mining companies and causing retail sites to limit trading amid the latest attempt of amateur investors to squeeze Wall Street.

But the so-called silver squeeze proved controversial on the Reddit forum Wall Street Bets, with many users arguing the army of day traders should keep targeting GameStop shares and not shift their sights elsewhere.

Last week, traders organizing themselves on Reddit realized their power when they bid up GameStop shares by more than 200%, hitting hedge funds and others who had been betting the price would fall for more than $19 billion.

On Monday morning, the pivot towards other targets picked up speed, with the hashtag #silversqueeze trending on Twitter. Online financial personalities were cheering on day traders, with bitcoin investor Cameron Winklevoss tweeting: “If Silver market is proven to be fraudulent, you better believe Gold market will be next.”

It has risen around 17% over the last five days as Wall Street Bets members encouraged each other to buy up silver in the belief that major financial institutions are betting the price will fall.

Read more: Buy these 4 stocks poised benefit from a spike in silver prices, says RBC Capital Markets – including two set to soar 73%

The latest data from the US regulator showed money managers are betting the price will rise, however.

BlackRock’s iShares Silver Trust surged more than 10% on Monday. The world’s biggest silver exchange-traded fund saw inflows of close to $1 billion on Friday.

Shares in silver companies jumped. Miner Fresnillo’s London shares soared 17.81% while Polymetal International was 6.93% higher.

Silver retail sites were left struggling to keep up with the demand. Money Market said it would not be taking any further silver orders until mid-Monday morning due to “extreme demand”. APMEX said it was expecting processing delays of up to three days.

Yet the move into silver was controversial on the Reddit forum Wall Street Bets. Some users noted that huge investment banks, and the hedge fund Citadel Advisors, were the biggest holders of the iShares Silver ETF.

“By buying silver/going long on silver, you would be directly putting money into the pockets of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $GME,” one user posted. Others said the Reddit army should focus their efforts on driving up the GameStop share price, which was around 8% higher in pre-market.

Milan Cutkovic, market analyst at trading platform Axi, said silver is a “far more difficult” market to move than smaller stocks such as GameStop. Yet he said that “last week’s events showed that the impact of the retail frenzy should not be underestimated.”

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