Silver price spikes as Reddit focus shifts to commodities

• Silver prices have leapt to a five-month high as the Reddit-inspired frenzy that scrambled stock markets last weeks spills over into precious metals
• Silver soared almost 8 per cent to $29 per ounce, the highest since mid-August, after retail sites were flooded with demand for bars and coins over the weekend
• The concept of a “short squeeze” on silver emerged last week, with Reddit users urging each other to pile into the iShares Silver Trust
• Users argued that banks have been keeping silver prices artificially low, masking an actual shortfall of supplies
• As a by-product of silver’s rise, many silver-focused companies have also benefited, with shares in ASX-listed Argent Minerals (ARD), Boab Metals (BML) and Investigator Resources (IVR) all up around 20 per cent

Silver prices have leapt to a five-month high as the Reddit-inspired frenzy that scrambled stock markets last weeks spills over into precious metals.

In early trade on Monday, silver soared almost 8 per cent to $29 per ounce, the highest since mid-August, after retail sites were flooded with demand for bars and coins over the weekend.

“It’s been nuts — over the weekend we saw about three weeks’ worth of accounts opening in just a couple of days,” said John Feeney, business development manager at Guardian Vaults in Sydney.

“Silver spiked at the open this morning as all that volume from over the weekend hit the market.”

The concept of a “short squeeze” on silver emerged last week, with Reddit users urging each other to pile into the iShares Silver Trust — the metal’s largest exchange-traded product — suggesting that banks have been keeping silver prices artificially low, masking an actual shortfall of supplies.

“Inflation-adjusted silver should be at $1000 instead of $25,” one user posted. “Why not squeeze $SLV to real physical price.”

“Think about the Gainz [sic]. If you don’t care about the gains, think about the banks like JP MORGAN you’d be destroying along the way,” they added.

Unlike last week’s target, GameStop, which had been flat-lining before an unprecedented 1500 per cent spike, silver has been performing well over the last 12 months. It’s rallied more than 50 per cent in that time, and Goldman Sachs called it the “preferred precious metal” in a note dated January 27, which had the metal at a target price of $30 per ounce.

But it’s not just the price of silver itself that’s had a major boost: many silver-focused companies are also reaping the benefits of social media’s new power.

Shares in ASX-listed Argent Minerals (ARD) have risen almost 20 per cent this morning, while Boab Metals (BML) and Investigator Resources (IVR) were both up more than 20 per cent.

“There is this curious situation now where the Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyse something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne.

“The most important factor here is that silver is heavily shorted, the paper market is much, much larger than the underlying commodity can justify.”