Silver Sees Hopes of Further Gains After Spiking over 6%

WikiFX News (Feb.1) - Silver opened Monday's Asian trading session with a spike up to 6% at $28.8/ounce. Silver prices could go higher amid the Reddit-fueled boom in highly shorted silver.

GameStop wrapped up a week of wild swings after spiking nearly 70% last Friday. Retail investors now turn their eyes to ETF-iShares Silver Trust (SLV) following a post by a Reddit user, who suggested executing a “short squeeze” on silver.

The extraordinary spike came after retail sites were overwhelmed with demand for silver at the weekend. Apmex, the Walmart of precious metals products in North America, said it was unable to process orders until Asian markets open because of unprecedented consumption.

“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.

Retail outlets too much demand for silver may change its supply-demand balance, putting a premium on silver prices. In addition, the declining real returns and rising inflation expectations may also push silver prices higher in the short term.

Analysts said they expected the rally to be short-lived, with the size of the market making it far less easy to influence than companies like GameStop. “We are confident that the influence of retail investors on silver will not last all that long, and that ultimately industrial and institutional demand will be the key factor in the longer term,” said Eugen Weinberg, an analyst at Commerzbank AG.

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Chart: Trends of Silver Prices