Silver prices surge as Reddit's retail army refocuses wrath against precious metal short-sellers

  • Silver prices have surged amid increased retail interest as brokerages move to restrict speculation on stocks like GameStop.
  • XAG/USD has rallied over $2 from lows under $25.00 to highs of close to $27.00 on the day.

Spot silver prices (XAG/USD) saw a sudden surge in recent trade amid speculation that the reddit retail trader army, coordinating itself and emanating from the popular subreddit page WallStreetBets, may now turn its wrath onto perceived short-sellers of silver.

The move began shortly after the release of a batch of tier 1 US data, including an inline Q4 GDP growth reading and a slightly lower than expected weekly initial jobless claims number, but did not seem to have much to do with the data; XAG/USD surged from around $25.30 to nearly as high as the $27.00 level and the precious metal is now up north of 5.0% on the day. Gold also moved higher, though by a much lesser degree, and the move seems to have aided a broad pick up in risk appetite that saw US equity markets pick up ahead of the open and the US dollar fall.

Retail army refocuses pumping efforts elsewhere…

As a recap; retail traders have joined forces in recent days to pump a number of Wall Street’s most shorted small-cap stocks, with stocks such as GameStop (GME) seeing returns in excess of 2000% over the last few weeks. The aim has been to trigger a short-squeeze and to a large extent this does seem to have occurred; exact figures are not widely known right now but prominent hedge funds are reported to have incurred extreme losses, with many being forced to close out shorts.

However, the tide has turned against the retail army; retail-focused brokerages have increased trading restrictions on the likes of GME, AMC, BB and other retail short-squeeze favourites. As a result, GameStop opened down roughly 14% and others are seeing similar losses. Amid the surge in retail activity, outages have also been seen across a number of popular retail platforms such as Charles Schwab and E-Trade.

With trading activity increasingly restricted in their favourite stocks, Reddit traders appear to be turning their focus elsewhere. A number of microcap stocks that have thus far evaded broker restrictions have surged; for example, KYN Capital Group (KYNC), which surged over 180% on Wednesday, is already up in excess of 45% on Thursday.

Forcing a short-squeeze by bidding up the price of silver has also caught the imagination of the Reddit rebellion; this provocative post (link here), which claims that silver is highly manipulated, should be worth $1000 per troy ounce and told Redditors to “think about the banks like JP MORGAN you'd be destroying along the way”, urged retail traders to pump the iShares Silver Trust ETF (SLV). The trust is up 6.1%, roughly in line with the near 6% gains being seen in spot silver markets. Silver miners are seeing even more of a pump; First Majestic Silver Corp. (AG) shares have rocketed nearly 30% at the open.  

Potential market impact

As far as this silver "short-squeeze" goes, it is still very early days, with spot prices still well within recent ranges. However, in the admittedly unlikely scenario that silver did see a "real" short-squeeze (i.e. if silver surged 100% to fresh all-time highs), this could impact currency markets by undermining confidence in the fiat-based monetary system. As most people are aware, most major developed market central bank’s target inflation of about 2% per annum and, amid the shock of the pandemic which compounded pre-existing deflationary forces (such as globalisation, aging populations and technological innovation), central bank have been finding it increasingly difficult to meet their 2% inflation targets. As a result, central banks have turned to increasingly unorthodox methods of attempting to boost inflation, such as quantitative easing, which is essentially the creation of new money out of thin air to buy government (and bank and corporate) debt, in order to artificially suppress interest rates and thus spur economic activity.

A key problem with such policies is that many fear that expansion of the money supply in such a way will boost inflation. Given that precious metals are seen as a hedge against inflation, any massive surge in precious metal prices might be seen as an early omen for an incoming surge in inflation. This would undermine confidence in fiat currencies across the globe, and the various winners and losers might be difficult to predict but given the fact that it is the global reserve currency, it would seem likely that the USD would have the most to lose from any precious metal price surge-induced loss of confidence in fiat currencies.

XAG/USD key levels 


Today last price 26.91
Today Daily Change 1.70
Today Daily Change % 6.74
Today daily open 25.21
Daily SMA20 25.84
Daily SMA50 25.09
Daily SMA100 24.82
Daily SMA200 22.68
Previous Daily High 25.49
Previous Daily Low 24.7
Previous Weekly High 26.05
Previous Weekly Low 24.19
Previous Monthly High 27.41
Previous Monthly Low 22.59
Daily Fibonacci 38.2% 25
Daily Fibonacci 61.8% 25.19
Daily Pivot Point S1 24.77
Daily Pivot Point S2 24.34
Daily Pivot Point S3 23.98
Daily Pivot Point R1 25.57
Daily Pivot Point R2 25.92
Daily Pivot Point R3 26.36



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD recaptures 1.1300 amid falling yields, EZ inflation eyed

EUR/USD is trading above 1.1300, extending the upside amid a renewed risk-off wave. The US dollar tracks the sell-off in the Treasury yields, shrugging off Moderna Inc.'s warning against the Omicron covid variant. Eurozone inflation, Powell’s testimony awaited.


GBP/USD rebound appears capped near 1.3330 amid risk-aversion

GBP/USD is making a minor recovery attempt above 1.3300 on Tuesday, as the US dollar turns south again in tandem with the Treasury yields. Renewed Omicron covid variant fears damp the market mood as well as the pound. Focus on covid updates, US data and Powell.


Gold inches back closer to $1,800 amid Omicron variant fears

Gold picks up bids to refresh intraday high. Risk appetite improves as market players reassess covid variant fears. Policymakers, experts reject concerns over the need for major lockdowns, readiness to have vaccines sooner.

Gold News

XRP price on edge of cliff as Ripple faces imminent collapse

XRP price followed the rest of the cryptocurrency market lower over the weekend. The US Thanksgiving holiday gave cryptocurrency traders and investors some early Black Friday deals, but downside risks remain.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!