After driving GameStop stock from 19 up to a high of 380, a band of online trading activists harnessed Reddit’s “WallStreetBets” forum to trigger aggressive buying of silver. Over a three-day stretch, January 28 through February 1, the futures price of silver skyrocketed 22 percent to an intra-day high of $30.35 an ounce, its highest level in nine years.
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Posts on the Reddit trading site called for buying silver contracts as a way to punish large banks that were supposedly suppressing silver prices, though the posts presented no evidence. Among those encouraging the buying were the Winklevoss twins, best known for suing Facebook CEO Mark Zuckerberg, after claiming that he stole their idea for the social network.
“The #silversqueeze is a rage against the machine” Tyler Winklevoss tweeted.
Reddit traders, though, failed to maintain all of silver’s gains. The precious metal closed the week at just under $27 an ounce.
“The Reddit-rally was primarily driven by short-term speculators which have exited the market again, rather than longer-term investors,” Carsten Menke, an analyst at Julius Baer Group Ltd. told Bloomberg News.
Nationwide Coin and Bullion Reserve recommends investing in silver bullion coins and bars for the long term, rather than speculating in the volatile silver futures market. Silver is a precious metal that is valued not only by collectors but also for its industrial applications. The metal is widely used in electronics because it is an excellent conductor of electricity. It is also a terrific conductor of heat. As a result, there is a growing demand for silver in the rapidly growing business of solar energy cells. This is why Goldman Sachs commodities analyst Jeffrey Currie refers to silver as a “ turbo-charged version of gold.”
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