The war between amateur investors and professional Wall Street traders continues. This time, silver has risen in value – its quotes have reached the highest levels over the past eight years.
Let me remind you that after the amateur investors from the Internet forums on the Reddit website raised the price of GameStop shares, they began to buy up precious metals. They have been heating up the stock market for some time now investing in low performance companies. For example, the GameStop video game retail chain became the favorite of this flash mob. Since the beginning of the year, its shares have risen in price by 685%. They also invested in AMC Entertainment cinema network and Nokia shares.
The US Congress already brought its attention on the situation with the shares of GameStop and AMC Entertainment, hedge funds and communities on the Reddit platform.
Big hedge funds had been making money by short selling or shorting, but the rise in the shares of GameStop, a losing firm that was considered close to bankruptcy, came as an unpleasant surprise to them.
As a result of this unexpected rise in stocks, hedge funds suffered huge losses as they borrowed money from other investors.
Silver market growth
Amateur traders did not stop at this, and after coordinating their actions in the r/wallstreetbets community on the social network Reddit, they began to buy silver and shares of its mining companies, including Australian ones.
Thus, Argent Minerals rose 60%, while Investigator Resources rose 47%.
Silver coin sellers are reporting record demand and stock depletion, and on the London Stock Exchange silver is up 11% to $ 30 an ounce, the highest price since 2013.
What do experts say
“It’s a curious situation – people on Reddit are looking at a bigger target and are trying to short squeeze the silver market,” said Melbourne-based analyst Kyle Rodda.
Silver prices have risen 20% on average since last Wednesday. Reddit users encourage each other to buy precious metal.
However, while Gamestop shares were inexpensive prior to the action of amateur traders, silver has soared this year. In addition, many large investors have already taken into account in their long-term strategy that precious metals will rise in price amid the Covid-19 pandemic and its consequences.
Plus, the silver price will be much more difficult to manipulate than GameStop stock. “The market capitalization of silver is between $ 1.4 trillion and $ 1.6 trillion,” said Hussein Sayed, an analyst at FXTM. “Let’s remind that GameStop’s capitalization was about $ 1.5 billion.”
Analysts agree that only those investors who enter the market at an early stage and withdraw funds in time, as it will be just a wave of high prices, will be able to win. Those who hope that growth will continue forever are unlikely to keep their income.
What do you think about the financial scandal surrounding Reddit and the professional investors from Wall Street? Do you have any investment experience? Share your opinion in the comments below! I will be happy to answer any questions or submit your project to my team at Astorts Group for evaluation.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East and New Zealand as area of interest! At the moment is the CEO of Astorts Group. He is an UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.