For the past couple of weeks, traders have been jumping on any thinly-traded market that has the potential to see massive gains. Following the rise and fall of stocks such as GameStop (NYSE: GME) and AMC (NYSE: AMC), the traders that first jumped onto these short-squeezes are now looking for now opportunities to flex their combined speculative muscle on. As it turns out, silver markets have become their next big target. Prices for silver shot up to an eight-year high on Monday thanks to traders, with the precious metal seeing the largest one-day gain in over a decade.
The idea that traders, especially those working together over social media platforms such as Reddit, should target silver as their next speculative investment started late last week. As brokerages began to lock traders out of other hotly traded stocks, silver was already targeted as another potential investment alternative. While silver has some industrial demand, there’s more than enough production right now to cover whatever is needed by companies around the world. As such, most silver trading is done on a speculative basis than anything else.
“It’s become like the GameStop of commodities. It doesn’t make any sense. It could be equally ugly on the way down,” said one metals analyst, Edward Meir, according to the Wall Street Journal. “They can cause very significant disruption because silver is a market with a history of very, very high volatility. But can they replicate a GameStop? Unlikely,” added BMO Capital Markets analyst Tai Wong.
While prices for silver futures have shot up, even physical demand for silver has been rising as well. Retail investors are reportedly buying up physical silver more than ever right now. At the same time, silver-based ETF’s are also rising in value right now in tandem with silver prices.
As to be expected, stocks of silver miners shot up significantly as well. Companies like First Majestic Silver (TSE: FR) shot up around 23.5% over the course of the day, with other large silver miners reporting similar, double-digit gains. The biggest winners, however, were some of the smaller silver miners on the market. Thinly traded Comstock Mining (NYSE: LODE) shot up as much as 116.9% on Monday, the single biggest stock win of the day.
The real question going forward is whether or not silver will see similar triple or quadruple-digit gains in the upcoming weeks, just like some of these other stocks. For the most part, that doesn’t seem likely. For one, attention is still somewhat divided among speculative traders between remaining in GameStop and AMC, trying to push stock prices even higher, or sell their gains and go off into a new investment, like silver stocks.
Even despite this, however, silver as a broad market has enough areas where people can dilute their attention towards. Whether that be silver itself, or small-cap stocks, unless traders all focus on one specific silver investment, the explosive gains seen earlier likely aren’t going to manifest any time soon, if they will at all.
In the meantime, further upward momentum is expected for silver prices. However, don’t expect triple-digit gains anytime soon.
