Trading | 8 months ago
Reddit day traders are slowly turning towards silver for their next target. A short-squeeze occurs when price of an underlying asset jumps sharply higher, forcing the short sellers to buy that underlying asset in order to avoid greater losses later on.
Recently the Wall Street had witnessed a series of short squeezes on several different stocks including GameStop Corp. (GME) and AMC Entertainment Holdings Inc. (AMC). This was a combined effort of retail traders on a social news aggregation and discussion platform Reddit. But after a few days these retail traders have been restricted from hot stocks like GameStop and AMC on some trading platforms. Due to this, GameStop stock price crashes as Robinhood app and Interactive Brokers restricts trading in the video game retailer along with AMC Entertainment, Blackberry and other stocks.
As a consequence of trading restrictions from several brokers, retail traders of Reddit are targeting precious metals. We know that many traders and banks resort to bullion market of gold and silver to cover the real economic crisis and inflation. Traders are sharing their wild views on the Reddit site. Market has already started reflecting the effort of retail traders. The iShares Silver Trust gained 7.2% on Thursday morning. Spot silver also gained 6.8%. Shares in First Majestic is up over 20%.
As we can see that the combined effort of the retail traders can dramatically influence the price of an underlying assets including stocks and precious metals. But when we compare the market capitalization of an individual company and estimated market capitalization of Silver, the retail traders will have a hard time do move silver into a short squeeze position.
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