The buying frenzy also fed into mining shares. Mexican silver miner Fresnillo Plc surged as much as 21% in London trading. China Silver Group Ltd. rose as much as 63% in Hong Kong, while Australia’s Silver Mines Ltd. gained as much as 49%.
The calls to buy silver began appearing on WallStreetBets as early as Wednesday, when the mania surrounding GameStop reached a fever pitch. Some of the posts touched on a similar David-vs-Goliath theme that has inspired individual investors to take on short-selling hedge funds: “Any short squeeze in silver paper shorts would be EPIC. We know billion (sic) banks are manipulating gold and silver to cover real inflation.”
But that narrative isn’t as straightforward as the one surrounding GameStop, one of the most-shorted stocks in the U.S. before it began surging this month.
Silver has performed well over the past year, rallying more than 60% on a weaker dollar and hopes for an end to the pandemic. It has also attracted bullish commentary from some of the biggest Wall Street banks. Goldman Sachs Group Inc. described silver as the “preferred precious metal” in a Jan. 27 research note that had a price target of $30 an ounce. Net-bullish bets by money managers rose to a three-week high in the week to Jan. 26, according to CFTC data compiled by Bloomberg.
Short-term forward rates on the London silver market flattened on Monday, indicating strong demand for the metal in coming weeks.
“I can envisage a scenario where maybe a hedge fund has purchased maybe a short-term tactical long position, so the upside could be a combination of several factors now,” said Philip Newman, managing director at consultancy Metals Focus.
Locking Up
Still, that hasn’t stopped some retail investors from piling in. By Sunday, sellers of physical silver including Apmex—often called the Walmart of precious metals products in North America—said they were unable to process orders until Asian markets opened because of record demand. “It’s been nuts,” said John Feeney, business development manager at Guardian Vaults in Sydney.
Ken Lewis, Apmex’s chief executive officer, said the decision to temporarily suspend silver sales was unprecedented in the company’s history and that it may take longer then usual to fill orders going forward.
“As we evaluate the markets, it is difficult to know where silver’s price and demand will go in the coming day and weeks,” Lewis said, adding that his firm is “locking up any metal we can find in the marketplace.”
—With assistance from Matt Turner, Yvonne Yue Li, Ranjeetha Pakiam, James Thornhill, Sam Potter and Martin Ritchie.
This article was provided by Bloomberg News.