Move over GameStop, Reddit mania is spreading to the precious metals market.
Silver futures surged as much as 13% to Monday, touching five-month highs. That follows a 6% rally last week.
Meanwhile, retail sites warned customers over the weekend they could not meet skyrocketing demand for silver bars and coins. And “#silversqueeze” is trending on Twitter.
In more recent trading, silver futures were up almost 11%. Shares of precious metals miner Coeur Mining (CDE) rallied 20% in premarket trading, while Pan Am Silver (PAAS) rose 15%.
The moves provide another example of the power of a group that has captivated Wall Street and Main Street: WallStreetBets. The Reddit forum sent GameStop (GME), AMC (AMC) and other heavily shorted stocks skyrocketing last week, roiling markets and crushing some hedge funds that had bet against those stocks. Robinhood, the free-trading app, came under fire after restricting trades in GameStop and other stocks.
Several noted that JPMorgan (JPM) paid a record $920 million fine last year to settle charges that it engaged in manipulative trades of futures tied to precious metals as well as Treasuries.
“It’s not surprising to see the sharp and abrupt uptick in consumer demand overwhelm the physical supply of silver coins held by dealers in the short term,” Ryan Fitzmaurice, a commodities strategist at Rabobank, told CNN Business in an email.
However, unlike GameStop and other unloved stocks targeted by WallStreetBets, silver futures have been strong of late. Hedge funds and other institutional investors had been bullish on silver futures and the precious metal was trading near multi-year highs.
“It is a dramatically different market setup,” Fitzmaurice said. “I am not sure how well this new Reddit trading strategy will fare in futures markets and especially the notoriously volatile commodity markets.”