Due to the restrictions imposed by retail brokers on recent retail favorite stocks like Gamestop and American Cable, and in the frenzy to find the next short squeeze target, WallStreetBet traders have set their eyes on Silver. They believe that big banks are heavily short silver and think they can squeeze them. They have started piling into the commodity and it is up 10% today, reaching a high of $30 per troy ounce in the European session, hitting 8 year highs.
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The rally began on the 28 of January at around $25.27 to where it now seats at mid $28.
The rally may be short lived but it is interesting to watch. If they are actually successful, would they actually short squeeze the banks? According to data cited by Reuters, global short interest in silver is equivalent to about 900M ounces, which is just short of one year of global production. Banks and brokers hold most of that, adds Reuters, with about 610M ounces. However, they say that it is not clear whether they are net short on the metal or whether their bets offset very big physical holdings.
If they are net short on the metal, a short squeeze might be possible, but if the short positions are just a hedge against physical holdings, then pumping the price may not yield much of a damaging effect.
Victor Nnadi is an Independent Economics Researcher and a Securities Trader.
