Amateur social media traders have now started making buying calls on the silver to higher the precious metal prices. It appears that speculative trading has been working for them.
The silver price soared sharply since last Wednesday and extended the rally into Monday trading with double-digit percentage gains.
The futures of precious metal soared to the highest level in seven-years in early Monday trading, breaching Goldman Sachs’ price target of $30/oz. The firm has recently suggested investors dump the greenback and buy the precious metal. Citi Group has provided a target price of $40/oz.
Robust demand is adding to trends
Silver coin and bullion platforms have been reporting unprecedented growth in demand, making it difficult for them to process orders.
U.S. bullion broker Apmex stated that they expect a 1-3 day processing delay for silver transactions, while SD Bullion and Money Metals warned of extraordinary demand.
“The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyze something of a short squeeze in the silver market,” says Kyle Rodda, an analyst at the IG Markets brokerage in Melbourne.
Reddit day traders have been speculating through videos and social media posts that rising silver prices could hurt big investors and hedge funds who are short on silver.
The social media market movers have the potential to turn things around quickly, and this is evident from the GameStop stock’s price rally and other high short squeezed stocks last week.
“It’s a fools’ errand, it’s financial anarchy; somebody is going to get hurt,” said Ross Norman, a veteran precious metals trader.
However, he said that Reddit users are not accurately targeted big banks because their physical holdings are hedged.
“The Reddit forum’s targeting of large banks was misplaced, since the lenders used futures contracts to hedge their physical holdings of silver, meaning they were not speculating on the price falling, Mr. Norman said.