Silver grows as GameStop Day traders move on to other assets

The most actively traded silver futures closed 2.1% at $ 25,922 a troy ounce after adding up to 6.7% earlier, while First Majestic Silver shares traded in the US Corp.

AG 21.38%

, a mining company, finished the day at 21%. It also increased the iShares Silver Trust, a popular fund traded on silver-linked stock exchanges.

Overall, silver prices had quieted in recent weeks, staying in a tight trading range alongside other precious metals that was well below the multi-year highs it reached during a rally on last summer. But Thursday’s gain at one point pushed the metal back near that nearly eight-year peak.

The moves represent what some analysts called an inevitable move by day traders to other asset classes after oversized gains in popular stocks like GameStop. Corp.

GME -44.29%

and AMC Entertainment Holdings Inc.

AMC -56.63%

The moves have captivated Wall Street as individual investors acquire hedge funds that bet on declining such stocks and major changes in the silver market could add to the frantic trade.

A short squeeze occurs when short sellers borrow an asset, sell it, and try to repurchase at lower prices. If the price of the asset rises sharply, short sellers will be forced to buy at higher prices to minimize their losses, being “squeezed” out of the market.

Analysts have pointed to price manipulation in the silver market dating back several decades, even when regulators famously accused the Hunt brothers of raising prices in 1979 and 1980.

The Reddit post referred to the acquisition of JPMorgan Chase & Co., a major precious metals trader and the country’s largest bank. He also mentioned silver stocks, such as First Majestic and ETFs, which are accessible to everyday investors. It should be noted that silver futures also rose on Thursday because they are usually traded less frequently by individual investors.

Some notable oxen of precious metals took note of the great oscillations. Peter Schiff, CEO of Euro Pacific Capital, said on Twitter that the shift to silver shows that Reddit day traders are getting smarter because silver miners have good value.

“Silver stocks are really cheap and represent good investment value,” he said.

Write to Amrith Ramkumar at [email protected]