WallStreetSilver and the Silver Squeeze: What You Need to Know

what is silver squeeze

Contact us now at [email protected] to find out more about buying and storing silver bars and coins in a secure and private manner. Jesse is now a popular and controversial financial media personality with over 200,000 social media followers and nearly 10 million views per month on all platforms. Blackrock’s BLK iShare Silver Trust, which represents the largest silver ETF, saw an unprecedented inflow on Friday. Nearly $944 million was poured into this ETF on Friday alone.

There are rumblings of a potential “silver squeeze” ahead as Reddit traders attempt to replicate last week’s GameStop GME short-squeeze in the silver market. As a long-time believer in hard assets such as gold and silver, that is a thesis that I can get excited about (unlike GameStop, which is extremely overvalued). The idea behind the “silver squeeze” thesis is that big banks and hedge funds currently have massive short positions in the silver market for the purpose of suppressing the price of the precious metal. Reddit retail traders have once again taken a position against hedge funds and money managers. The hashtag “Silversqueeze” is top trending on social media channels, including Twitter and Reddit, and retail traders are buying silver like there is no tomorrow. Silver crossed above the $30 mark earlier today, and silver ETFs experienced a massive inflow on Friday.

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.

Dealers are asking for 35% premiums… and that’s if you can get your hands on any silver at all. I couldn’t fail to have seen the GameStop buying frenzy that has consumed US markets in the past week. The American video game retailer is in a very unusual situation. This doesn’t mean manipulation isn’t taking place, though, and the saga of the Hunt brothers proves this is something that can happen.

  1. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
  2. Many Wall Street insiders even bet that this will take place in the near future.
  3. The key is purchasing gold and silver before the steep premiums that could culminate as a result of Basel III, the #SilverSqueeze, and inflation.

Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors. Shortly after the news of a possible silver squeeze there were many posts on the subreddit denouncing this move as members sought to distance themselves from the idea. Despite having a consistent motive to the previous short squeezes – a protest against short-selling hedge funds – there are a number of issues when it comes to shorting the silver market. 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.

WallStreetSilver and the Silver Squeeze: What You Need to Know

On Friday alone (Jan. 29), the iShares Silver Trust (SLV), the world’s largest silver-backed exchange-traded fund, added nearly $1 billion of inflows. Silver stocks were ripping higher, and many were seeing their trading volumes explode anywhere from 6-10 times normal levels. It’s all related to the now infamous WallStreetBets calls to action, the latest of which targeted silver.

what is silver squeeze

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.

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.

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, https://www.wallstreetacademy.net/ 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.

To understand the silver squeeze, you first need to know the meaning of a short squeeze. Short-sellers borrow shares of stocks that they expect to drop in price. Then they sell the stock and attempt to buy it back at a much lower price. It was shortly after the Reddit-fueled, meme stock saga that the silver market landed squarely in the cross-hairs of the online community.

Reasons why a Forced Silver Squeeze is Unlikely:

That’s because the precious metal is heavily shorted – meaning there’s a large number of futures contracts predicting the price will drop. If this doesn’t happen, “shorts” will have to pay the difference in price. At one point, the billionaire brothers owned one-third of the world’s silver supply. Their actions caused the price of silver to rise from $6.08 per troy ounce at the beginning of 1979 to $49.45 just one year later. In the end, their investments in futures contracts were their undoing. Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses.

what is silver squeeze

The below silver chart shows the one-day percentage change in price. “There’s far more cash trying to chase physical assets because we’re suffering the bite of inflation, and supply in all of these markets is becoming extraordinarily thin,” explained Eric Sepanek. Watch his full analysis of the forces about to set off a physical silver rally on AZTV’s Mike Broomhead show.

Is There a Silver Squeeze Coming?

Some of this move will turn out to be a short-term speculative buying frenzy. But what this whole saga has done is to introduce a massive new following to the silver space. Everyone is buying, and no one is selling the physical metal.

Silver squeeze explained

You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection.

What is the Silver Raid?

And yet, I remember well, less than a year ago in mid-March when the world started a major lockdown in response to the Covid-19 pandemic. Gold and silver bullion dealers were nearly completely sold out within days. In some cases, silver premiums reached historic highs, near 100% of spot prices. If a lot of new investors rush to buy silver, raising the price, the short-sellers will be forced to buy it back at a much greater price. It’s more complex than that, but this is the bones of a silver squeeze. To short, or short-sell means borrowing a share or commodity, and then selling it.

Our ultimate goal is to help extend our award-winning customer service to our educational content. Ultimately, we want you to feel comfortable and informed when making investment decisions, regardless of whether that is with us or not. Some of the biggest recent happenings in the investment world have arisen thanks to users of the Reddit website and app. The insane increases seen in GameStop and AMC share prices had their inception in the WallStreetBets community, and the big news in silver is at least partially attributable to WallStreetSilver.