Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples. DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material. I believe that chart analysis is a tool that is helpful for determining if a large 3 ducks trading system babypips ctrader forex platform move is likely ahead in the silver market. After all, this type of analysis helped me spot Bitcoin’s recent run-up ahead of time. Right now, silver futures are trading in a range between the $22 support level and the $30 resistance level that formed at the peak in early-August. If silver can push above $30 on strong volume, the odds of an even more extensive bullish move will increase.
To understand the silver squeeze, you first need to know the meaning of a short squeeze. Short-sellers borrow shares of stocks that they expect to drop in price. Then they sell the stock and attempt to buy it back at a much lower price. Shortly after the news of a possible silver squeeze there were many posts on the subreddit denouncing this move as members sought to distance themselves from the idea.
- As a long-time believer in hard assets such as gold and silver, that is a thesis that I can get excited about (unlike GameStop, which is extremely overvalued).
- Buying physical silver or shares of silver stocks is a way to be involved in the so-called “Silver Squeeze 2.0.” When more investors buy a stock or commodity, short-sellers usually need to sell shares to cover their losses.
- In January 2021, GameStop and AMC weren’t the only stocks experiencing major swings fueled by certain Reddit communities.
- 3D illustration of silver bullion bars over a blue background with growing chart.
Basel III could accelerate the efforts of Wall Street Silver, the Reddit group behind the Silver Squeeze. The Silver Squeeze is a concerted effort by these investors to stop the big bullion banks’ silver market manipulation. By taking delivery on silver futures and purchasing large quantities of physical silver.
Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust https://www.forex-world.net/blog/ for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors. Reddit retail traders have once again taken a position against hedge funds and money managers.
For these reasons, we think that precious metals investors can still find value in the silver ETFs now that the iShares Silver Trust has managed to generate a sustained bounce off of its November 2020 lows (just above $20.50). For SLV in particular, the psychological barriers at $30 could provide headwinds in the near term but the broader bullish trend remains strong and we think it’s simply a matter of time before these barriers are broken. In practical terms, it is much more probable that the recent surge in silver prices represents little more than a short-term trading fluctuation that will turn out to be of little consequences for investors with long-term time horizons. That said, we think that the “Great Silver Rally” is still in its early stages and we remain bullish on the space given the declining prospects for the U.S. dollar.
The Relative Strength Index on the daily time frame has reached near $70, which means a pullback is likely. If there is a pullback, prices may retrace to the $27 to $28 price level. Silver prices recorded two consecutive weeks of gains on Friday, following two back-to-back weeks of losses. The big bull run started on January 28, when the silver open price was $25.26 and the low was $24.86. On Friday, January 29, silver prices touched a high of $27.65, and this bull run pushed the silver spot price above $30 today. In simple words, silver has surged nearly 19% since Thursday last week.
Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I couldn’t fail to have seen the GameStop buying frenzy that has consumed US markets in the past week. Jesse is now a popular and controversial financial media personality with over 200,000 social media followers and nearly 10 million views per month on all platforms.
Silver squeeze! Should I buy silver today?
The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.
It’s a well-known fact that silver and gold can help you hedge against inflation. The key is purchasing gold and silver before the steep premiums that could culminate as a result of Basel III, the #SilverSqueeze, and inflation. If you don’t want to worry about market volatility, however, you’ll want to make sure you’re buying the right silver products. Robinhood’s faced major backlash and several lawsuits for restricting trading of some meme stocks. National Securities Clearing Corporation (NSCC) asked the company to put up $3 billion in collateral, forcing the app to curb some stocks. This demand was later lowered and the company raised over $1 billion from investors.
About SLV ETF
Tax treatment depends on your individual circumstances and may be subject to future change. At one point, the billionaire brothers owned one-third of the world’s silver supply. Their actions caused the price of silver to rise from $6.08 per troy ounce at the beginning of 1979 to $49.45 just one year later. In the end, their investments in futures contracts were their undoing. There’s a thought among those in the community that market manipulation has purposefully kept the price of silver down. And while this may seem like an over-the-top claim, it’s hard to deny the facts of what happened on what has become known as the “Silver Raid Day” in February 2021.
The idea was to buy into the ETF which would force the fund to allocate new shares and purchase silver to back them. A sharp surge in interest in the ETF would lead to a sudden increase in the demand for silver and likely result in a sizeable increase in the price for the commodity. It was shortly after the Reddit-fueled, meme stock saga that the silver market landed squarely in the cross-hairs of the online community. https://www.forexbox.info/four-types-of-forex-fx-trend-indicators/ However, the supposed silver squeeze and the one that followed have been rather ineffective when compared to short squeezes on Gamestop (GME) and the like. This article takes a look at the events surrounding the silver squeeze and some of the difficulties of shorting the silver market. People can argue over whether the price of silver will skyrocket, but it’s hard to deny that market manipulation exists.
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In the end, we think that the precious metals community has been misled by all of the fervor that has been centered around the power of the Reddit investment community. However, the global commodities space is a very different animal and investors must have an understanding of the dominant long-term trends visible in these sectors before making the decision to buy or sell silver near its current price levels. Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. They believe that by buying and holding GameStop, they can force the price higher, and force GameStop short-sellers to buy back the shares at ever-higher prices.
Can Rolls-Royce shares double from here?
There are rumblings of a potential “silver squeeze” ahead as Reddit traders attempt to replicate last week’s GameStop GME short-squeeze in the silver market. As a long-time believer in hard assets such as gold and silver, that is a thesis that I can get excited about (unlike GameStop, which is extremely overvalued). The idea behind the “silver squeeze” thesis is that big banks and hedge funds currently have massive short positions in the silver market for the purpose of suppressing the price of the precious metal. According to this theory, if enough small investors buy into the silver market, the big banks and hedge funds will be forced to cover or buy back their short positions, which would send the price of silver soaring.
Some of these were only temporary measures, and many directly targeted the Hunt brothers. Whether these actions were appropriate – many of which received government support – remains up for debate. What it proved, however, was that the “higher ups” could change the rules.