GameStop Investors Switch to Silver as Prices Surge
The dominance of social media in the investment world is currently growing. We are in an era when one tweet from the richest man in the world is shifting stock prices within a day. Do you know that silver prices suddenly hit an eight-year high after people started talking about purchasing it on social media? This happened just one week after amateur investors piled onto the shares of GameStop. The results saw a whopping 700% jump.
GameStop investors switch silver due to price hike
Monday, the silver metal prices rose by 11% and became $30 an ounce. Shares in several mining firms went up by 60%. However, small-time traders who exchanged tips on Reddit are supposedly behind this trend and seek to shoot prices up. But some users are stating that this is a “silver squeeze” and that Wall Street giants are monitoring it.
Apparently, this is an example of small-time traders taking up massive Wall Street hedge funds that are likely to make profits either when the asset/stock falls. However, they can lose heavily when the prices rise.
Social media platforms like Reddit call these “short sellers” that manipulate markets. Thus, amateurs buy suck assets/stocks and drive the prices up and inflict big players’ loss.
GameStop is a clear example of such an incidence. In January 2021, amateur investors put lots of money in the GameStop, Blackberry, and AMC. These are all loss-making retailers.
The shares of GameStop were trading below $20 each at the beginning of the month. But by the last week of January, it hit $350. Again, on Monday it dropped down to $225. Currently, the battle looks to have moved onto silver, which is a way bigger market.
How did the speculation get fuel?
The cost of silver slid from its usual highs on Monday. However, the average price of the metal is high by 20% since Wednesday. Messages soon started circulating on Reddit forums and encouraged users to buy them. Moreover, websites that sell coins said a sudden increase in demand for silver and delayed deliveries.
While exchanging tips on social media, one person with a profile name RocketBoomGo asked fellow traders to assume the gains. The post was widely circulated and influenced more people through it.
More people mentioned things like if traders don’t think about their gains, they would be destroying banks like JP Morgan. However, some people on Reddit also expressed their skepticism. One of them said that they analyzed posts and comments from Wall Street Silver thread and saw that 80% came from profiles created two days before. Some also took to their posts and asked questions like who do such people work for.
The political fable of GameStop
The chief market strategist at FXTM, Hussein Sayed, said amateur investors would find it hard to change silver prices than what was seen for GameStop. Moreover, the complete value of silver in trade is around $1.4 to $1.6 trillion and 1000 times more than the value of GameStop’s shares till it became a part of big speculation. There is a huge proportion of the silver market that exists off-exchange making it not so easily sellable or purchasable online.