Silver Prices Jump In GameStop-Like Frenzy
Biggest one-day gain in more than a decade is latest sign of speculative trading that is jolting financial markets.
4 min
Online investors who spurred a trading frenzy in the shares of GameStop Corp. and AMC Entertainment Holdings Inc. have moved onto the global silver market, powering the precious metal to its biggest one-day advance in more than a decade.
Futures prices for silver in New York on Monday settled at their highest level in eight years, the latest work by a loosely knit group of speculators who congregate on social-media platforms including Reddit’s WallStreetBets. Some participants have been contending aggressive buying could power GameStop-like, quadruple-digit percentage gains in other arenas, with some chatter over the weekend focusing on the roughly $50 billion market for silver investments.
The idea of buying silver in unison was mentioned in the popular Reddit forum WallStreetBets last week, then quickly spread to other corners of the internet, even as many Reddit users said they weren’t behind the silver-market advance. Many investors piled into silver bars and coins online, along with silver-linked exchange traded-funds and shares of silver producers.
Many traders with experience in commodities say the trade is highly speculative. There is more than enough silver to meet industrial demand for everything from semiconductors to solar panels, and producers can raise output to take advantage of higher prices. Previous efforts to corner the market have ultimately preceded crashes, most famously when the Hunt brothers are alleged to have artificially boosted silver in 1979 and 1980.
Still, the recent wave of speculation is unlike anything many in commodities have witnessed in the recent past. Shares of miners like First Majestic Silver Corp. and Hecla Mining Co. have been among the stock market’s best performers recently—each rose more than 20% on Monday—while the largest exchange-traded fund tied to silver logged its biggest-ever daily inflow on Friday. Online silver dealers around the country have even reported soaring demand from retail buyers.
“It’s become like the GameStop of commodities,” said Edward Meir, a consultant focused on metals at brokerage ED&F Man Capital Markets. “It doesn’t make any sense…It could be equally ugly on the way down.”
The most actively traded silver futures advanced 9.3% to $29.42 a troy ounce, ending the day at a nearly eight-year high after briefly rising above $30 earlier in the trading session. Prices have risen nearly 15% in the past week, and Monday’s climb marked the metal’s biggest advance since 2009.
Silver’s rally echoed the recent leap in GameStop and AMC, propelled by a phalanx of individual traders gathering online. Highlighting the risks associated with these trades, GameStop shares fell 31% to $225 on Monday. Shares of the struggling videogame retailer are still up some 1,100% in the past month as traders undertake a “short squeeze,” forcing investors who had bet on share-price declines to buy back stock at higher prices to minimize their losses. That trend can add further fuel to rallies.
Professional traders are now weighing whether the flurry of demand from individuals can sustain the climb in silver—a market where trading is still concentrated in a small group of banks.
“They can cause very significant disruption because silver is a market with a history of very, very high volatility,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. “But can they replicate a GameStop? Unlikely.”
Rostin Behnam, the acting chairman of the Commodity Futures Trading Commission, which regulates markets for silver futures, said the agency is watching the action closely.
“The commission is communicating with fellow regulators, the exchanges, and stakeholders to address any potential threats to the integrity of the derivatives markets for silver, and remains vigilant in surveilling these markets for fraud and manipulation,” Mr Behnam said in a statement Monday.
Silver’s climb to start the week was even more remarkable to market watchers because gold rose only 0.7% and trading in other commodities was muted. Gold and silver often trade in similar directions and are seen as safe-haven investments during times of market turmoil.
Depositories at CME Group’s Comex—the biggest marketplace for silver futures—are brimming with almost 400 million troy ounces of silver, valued at around $12 billion at Monday’s prices. Vaults in London housed 1.1 billion troy ounces—worth $29 billion—at the end of 2020, according to the London Bullion Market Association.
Monday’s advance followed a weekend rush to buy the physical metal—which is used in electronics, jewellery and photography. Retail silver marketplaces including Money Metals and APMEX Inc. had notices on their websites Sunday saying they were unable to process new orders until markets opened because of unprecedented demand.
On Monday, many popular sites for purchasing silver and gold reported shipping delays or other purchase restrictions.
“Precious metals have never seen such a sudden surge in new interest,” said Adrian Ash, director of research at BullionVault. Over the weekend, openings of new accounts at the online marketplace for gold and silver rose to almost four times the daily average from 2020, itself a record year since BullionVault went live in 2005, he said.
Many traders and analysts are baffled by the moves in silver and said the logic behind a “short squeeze” is also questionable.
In GameStop’s case, hedge funds that had bet against the stock were forced to buy the retailer’s shares when individual investors drove the price higher to avoid bigger losses, propelling the shares even more. But for silver, hedge funds and other speculators actually have a net long position and stand to benefit from rising prices, Commodity Futures Trading Commission data show.
“This is just a speculative boom,” said Georgette Boele, senior precious-metals strategist at ABN Amro Bank.
A broad attempt by day traders to corner the market in silver wouldn’t be the first time someone has tried to dominate the precious metals market. Analysts have alleged price manipulation in the silver market going back several decades, including the episode with the Hunt brothers more than four decades ago.
Traders are also watching big inflows into the largest ETF tied to silver, the iShares Silver Trust, and other large funds. These funds and mining stocks are the easiest ways for individuals to bet on higher prices. The fact that silver futures themselves are rising shows that professionals are also trying to profit from the current excitement, traders say.
ETF buying can also add to market momentum because the traders who manage the fund must buy physical silver when investors put more money into the ETF. As a result, large inflows signal that the metal is in high demand.
Still, many professionals warn the silver rally will also end badly.
“It’s devoid of any fundamentals,” Mr Meir said.
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The 28% increase buoyed the country as it battled on several fronts but investment remains down from 2021
3 min
As the war against Hamas dragged into 2024, there were worries here that investment would dry up in Israel’s globally important technology sector, as much of the world became angry against the casualties in Gaza and recoiled at the unstable security situation.
In fact, a new survey found investment into Israeli technology startups grew 28% last year to $10.6 billion. The influx buoyed Israel’s economy and helped it maintain a war footing on several battlefronts.
The increase marks a turnaround for Israeli startups, which had experienced a decline in investments in 2023 to $8.3 billion, a drop blamed in part on an effort to overhaul the country’s judicial system and the initial shock of the Hamas-led Oct. 7, 2023 attack.
Tech investment in Israel remains depressed from years past. It is still just a third of the almost $30 billion in private investments raised in 2021, a peak after which Israel followed the U.S. into a funding market downturn.
Any increase in Israeli technology investment defied expectations though. The sector is responsible for 20% of Israel’s gross domestic product and about 10% of employment. It contributed directly to 2.2% of GDP growth in the first three quarters of the year, according to Startup Nation Central—without which Israel would have been on a negative growth trend, it said.
“If you asked me a year before if I expected those numbers, I wouldn’t have,” said Avi Hasson, head of Startup Nation Central, the Tel Aviv-based nonprofit that tracks tech investments and released the investment survey.
Israel’s tech sector is among the world’s largest technology hubs, especially for startups. It has remained one of the most stable parts of the Israeli economy during the 15-month long war, which has taxed the economy and slashed expectations for growth to a mere 0.5% in 2024.
Industry investors and analysts say the war stifled what could have been even stronger growth. The survey didn’t break out how much of 2024’s investment came from foreign sources and local funders.
“We have an extremely innovative and dynamic high tech sector which is still holding on,” said Karnit Flug, a former governor of the Bank of Israel and now a senior fellow at the Jerusalem-based Israel Democracy Institute, a think tank. “It has recovered somewhat since the start of the war, but not as much as one would hope.”
At the war’s outset, tens of thousands of Israel’s nearly 400,000 tech employees were called into reserve service and companies scrambled to realign operations as rockets from Gaza and Lebanon pounded the country. Even as operations normalized, foreign airlines overwhelmingly cut service to Israel, spooking investors and making it harder for Israelis to reach their customers abroad.
An explosion in negative global sentiment toward Israel introduced a new form of risk in doing business with Israeli companies. Global ratings firms lowered Israel’s credit rating over uncertainty caused by the war.
Israel’s government flooded money into the economy to stabilize it shortly after war broke out in October 2023. That expansionary fiscal policy, economists say, stemmed what was an initial economic contraction in the war’s first quarter and helped Israel regain its footing, but is now resulting in expected tax increases to foot the bill.
The 2024 boost was led by investments into Israeli cybersecurity companies, which captured about 40% of all private capital raised, despite representing only 7% of Israeli tech companies. Many of Israel’s tech workers have served in advanced military-technology units, where they can gain experience building products. Israeli tech products are sometimes tested on the battlefield. These factors have led to its cybersecurity companies being dominant in the global market, industry experts said.
The number of Israeli defense-tech companies active throughout 2024 doubled, although they contributed to a much smaller percentage of the overall growth in investments. This included some startups which pivoted to the area amid a surge in global demand spurred by the war in Ukraine and at home in Israel. Funding raised by Israeli defense-tech companies grew to $165 million in 2024, from $19 million the previous year.
“The fact that things are literally battlefield proven, and both the understanding of the customer as well as the ability to put it into use and to accelerate the progress of those technologies, is something that is unique to Israel,” said Hasson.
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