Is Silver the Next Gamestop? How Retail Investors Challenged Wall Street Giants Again

In the wake of unprecedented short squeezes involving stocks like GameStop and AMC in early 2021, a group of retail investors from the Reddit forum r/WallStreetBets (and the spinoff called r/WallStreetSilver) set their sights on the silver market, attempting to challenge Wall Street giants with a so-called “silver short squeeze.”

The silver short squeeze movement was sparked on the r/WallStreetBets forum, where users urged each other to buy silver and silver-related assets to drive up prices and create a short squeeze on large financial institutions holding short positions in the metal.

According to an article from J. Rotbart & Co., redditors thought that the silver market was particularly susceptible to a short squeeze because they believed commercial COMEX traders were holding obscured, large short positions.

A short squeeze occurs when investors who have shorted an asset are forced to buy it back to cover their losses as prices rise. This buying pressure pushes the price even higher, causing further losses for short sellers and substantial gains for early investors in the asset.

The silver short squeeze was driven by the belief that silver was undervalued and that its price had been artificially suppressed by large financial institutions. By banding together to buy silver, small investors aimed to expose market manipulation and level the playing field against Wall Street.

The silver short squeeze only managed to attract a small fraction of the wave of excitement that flooded the retail investment sphere from the Gamestop squeeze. So far, the hypothesis hasn’t held up well as the price of silver has only fallen since it started to blow up on Reddit. However, that doesn’t necessarily mean that it is entirely baseless or that silver isn’t undervalued.

Silver has been one of the most popular safe-haven and store-of-value assets for nearly all of written history. Along with gold, it is often even more popular in times of economic uncertainty. With the fear of widespread bank runs, rising interest rates, worsening conflict in Ukraine and more smaller-scale crises than you can count, it’s hard to call the economic outlook of 2023 as anything but uncertain.

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