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The merry band of day traders behind runaway stocks like GameStop piled into silver on Monday in an effort to squeeze Wall Street. But metals market experts say the resulting rally is more likely helping, rather than hurting, the big boys.
The price of silver skyrocketed on Monday as users of Reddit forum WallStreetBets piled into the precious metal and proclaimed it the next front in their war against Walls Street’s old guard.
The uptick, which mirrored frenzied trading in stocks like GameStop and AMC, resulted in an unprecedented volume of trades that sent the price per ounce of silver above $30 for the first time since 2013.
And it garnered support from the Winkelvoss twins and others who dibbed the move as “EPIC” and popularized the hashtag #silversqueeze.
Ryan Giannotto, director of research at GraniteShares, a New York-based ETF issuer, said that novice investors — like those on Reddit forum WallStreetBets — appeared responsible for the “vast majority” of Monday’s price spike.
“This has the fingerprints of a retail surge all over it,” he said, pointing to heavy trading volumes in silver exchange-traded funds as well as data showing metals brokers like APMEX saw a surge of new customers over the weekend.
But unlike their big victories squeezing hedge funds shorting small-cap stocks like GameStop, small investors are now betting with the conventional wisdom.
According to data from the Commodities Future and Trading Commission, the net position of metals traders dealing in silver has been a long one for the first few weeks of 2021.
Price of silver surges as Reddit traders find new target
The spike came amid increased interest in silver on Reddit’s…
And even if the small traders could keep the price of silver soaring, the the market for metals like silver is just too big to squeeze, experts said.
“Not only is it a very large market,” said Gianotto. “No one’s really short silver and it’s just too big for them to push over the line.”
Even some Redditors were preaching caution on Monday.
“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,” one WallStreetBets user posted late Sunday night. “The hedge funds are LONG silver NOT short silver.”
Some users also speculated that professional traders posed among them to start this rally for their own profit — pointing to a now-deleted WallStreetBets post from Saturday urging the group to push the price to $1,000 and ounce.
Three traders told The Post that this theory is a more than likely possibility behind the rally.
“I don’t think shorts are really being squeezed,” one UK-based metals trader told The Post. “I think all professional silver traders would be making money out of this.”