Whatâs Going On Here?Reddit-inspired retail investors were back at it on Monday, this time pushing silverâs price to an eight-year high. What Does This Mean?Investors piled almost $1 billion into the biggest exchange-traded fund (ETF) that tracks the price of silver last Friday (tweet this). That surge in demand made it one of retail investorsâ most-traded assets that day, and gave the commodityâs price its biggest one-day gain in thirteen years.
The timing is significant: silver's been a hot topic on Redditâs r/WallStreetBets â the forum where GameStop and AMCâs stocks caught fire â as retail investors try to carry out a similar âshort squeezeâ. The aforementioned ETF is, after all, backed by physical silver, meaning the fund provider is forced to buy the metal when it receives new investments. And if there isnât enough to go around, its price could be âsqueezedâ higher and higher and higher⊠Why Should I Care?Zooming in: This isnât just GameStop 2.0.
This situation is similar to last weekâs GameStop saga, but itâs different in a couple of key ways. Firstly, GameStopâs market value is much smaller â $1.4 billion to silverâs $32 billion â and as such easier for retail investors to influence. And secondly, institutional investors donât seem to be betting against the metal like they were against GameStop. In fact, theyâve been optimistic about its chances: data shows they have, in aggregate, invested in the metal, and Goldman Sachs recommended buying the asset last year.
The bigger picture: The tail might finally be wagging the dog.
Still, the fact silverâs price moved higher in such a significant way â especially considering how much more the market is worth than GameStop â shows the momentum retail investors are now having. It might only be a matter of time before institutional investors start following their lead in an effort to profit from the waves their smaller counterparts are making â if theyâre not already. | 