Silver surged at the week’s open, with futures topping $29 an ounce within minutes, as the the Reddit-inspired frenzy that roiled stock markets last week spills over into commodities.
The extraordinary spike came after retail sites were overwhelmed with demand for bars and coins at the weekend. Outlets including Apmex, the Walmart of precious metals products in North America, said they were 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. “Silver spiked at the open this morning as all that volume from over the weekend hit the market.”
Silver futures ended almost 6% higher last week following a jump on Thursday and Friday amid Reddit-style enthusiasm from hordes of retail investors. Unlike the beaten-up stocks targeted in the equity market including GameStop Corp., silver’s performed well over the past year, rallying more than 50% as the dollar fell and on expectations for a global recovery from the pandemic.
Most-active futures gained as much as 8.7% to $29.25 an ounce on the Comex, the highest price since September, and traded at $28.855 at 7:51 a.m. in Singapore. Gold futures rose as much as 1.1% to hit $1,870 an ounce
“Given there are a lot of retail investors interested in and aware of this story -- and that they are likely to be motivated and committed -- the price could run further,” said Nicholas Frappell, global general manager at Sydney based ABC Bullion.
Comments on silver began appearing on the Reddit forum r/wallstreetbets last week. People started egging each other on to pile into the iShares Silver Trust, the metal’s largest exchange-traded product, saying banks have been keeping silver prices artificially low, masking an actual shortfall of supplies.
Still, some of the biggest Wall Street banks have been positive on silver’s outlook in recent months amid a broad upswing in raw materials. Goldman Sachs Group Inc. described it as the “preferred precious metal,” according to a Jan. 27 note that had a price target of $30 an ounce.
In addition, money managers have had a net-long position on silver since mid-2019, according to futures and options data from the Commodity Futures Trading Commission. In the week to Jan. 26, the net-bullish bets on the metal were at a three-week high.
Silver is typically more volatile than its much more costly sister metal, gold, often posting sharp swings in prices. In addition to its role as a speculative asset and store of value, it has industrial uses, including in solar panels.
— With assistance by Jake Lloyd-Smith, Matt Turner, Yvonne Yue Li, Ranjeetha Pakiam, and James Thornhill
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February 01, 2021 at 06:06AM
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