What Is a Silver Short Squeeze?
However, around 9 AM New York time, as the U.S. trading session got underway, a massive flood of “paper” silver—in the form of futures contracts—was suddenly dumped onto the market. This deliberate maneuver drove silver back below the critical $33 level, halting the breakout in its tracks and demoralizing silver investors once again. And a funny thing happens along the way, they get caught up in the casino action. They come thinking that, OK, this is a solution, an antidote to the dollar. But let me tell you, it’s going to be twenty-seven thousand dollars next week. And people are making investment decisions based on this, which I just think there’s a lot of good reasons to buy gold and silver.
Preparing Your Investment Strategy
Thousands of retail investors made independent decisions to purchase silver based on shared information, creating demand pressure that temporarily overwhelmed normal distribution channels. The Exchange Stabilization Fund (ESF) was established in 1934 to intervene in foreign exchange, credit, and gold markets. The ESF was initially funded by part of the US government’s paper gains from revaluing gold from $20.67 to $35.00 per ounce. Since that time, the US government has intervened in the gold market to try to hold down its price. Previous attempts were countered by exchange interventions, particularly through raising margin requirements that forced leveraged traders to liquidate positions.
Physical market metrics offer concrete warning signals as squeeze conditions develop. Rising premium percentages on retail products, extending delivery times from major dealers, and declining registered inventories at exchanges all suggest increasing physical demand pressure. Silver squeezes demonstrate variable durations depending on participant behavior and market responses. The most intense phase of buying pressure typically lasts between 2-4 weeks, during which physical premiums reach maximum levels and delivery delays extend to their furthest points. Operational decisions regarding concentrate sales and refined metal marketing may shift during prolonged squeezes.
When news of Russia’s formal invasion reached the international community, the price of nickel increased so quickly that Guangda was forced to buy nickel to cover his losses. Investors should also consider how US Fed rate decisions influence precious metals and monitor current gold price trends and market analysis for additional context. Furthermore, those looking at smaller companies in this sector might benefit from navigating junior mining investment strategies, as these stocks often experience the most dramatic moves during silver market events. “Paper silver” ndax review investments like ETFs, futures, and mining stocks offer greater liquidity and convenience, but may not transmit the same price pressure to underlying physical markets that squeeze organizers are targeting. Many participants in Silver Squeeze 2.0 advocate for physical possession specifically to remove metal from available market inventories. According to Jeffrey Christian of precious metals analyst firm CPM Group, there exists around 3.4 billion ounces of physical silver in bullion form in the world today—plus another 2.0 billion ounces of coinage.
Even secondary markets for previously owned silver products saw premiums double as traders anticipated continued supply constraints. The silver squeeze movement continues to influence market expectations today. The Hunts initiated their silver accumulation as an inflation hedge during the economically turbulent 1970s.
Key Claims by Silver Squeeze Advocates
Short traders can sometimes lose even more money than traders who are long on an asset, since stocks have a floor ($0) but no definitive ceiling. Discovery Alert provides fast, reliable, and actionable insights into significant mining and exploration news. Our mission is to deliver clear, data-driven content that helps investors stay ahead of the curve. Stay ahead of the market with real-time alerts on significant ASX mineral discoveries through Discovery Alert’s proprietary Discovery IQ model, which turns complex mineral data into actionable insights.
There’s a growing online movement — once again — calling for silver buyers to unite and challenge what many see as a manipulated market. The unallocated gold is the gold dissolved in aqua regia, it is the gold accumulating on electrical plates, it is the gold formed into shot, it is the melted gold in their crucibles, it is the gold being stamped into blanks. It is also the gold in their inventory of bars and coins and wire and whatever products they have ready for sale. But investor buying based on an error is, at best, pulling demand forward. There are good reasons to buy silver, without the conspiracy theories.
- I was looking this morning at Twitter and one particular promoter of these conspiracy theories.
- The yellow metal started the week at about US$3,020 per ounce, but quickly tumbled below the US$3,000 level as markets around the world took a beating.
- Although the Synthetic Silver Price Index didn’t break out on Friday, it still posted a solid 1.21% gain.
- It’s that the metal is not in the form of a bar with a serial number sitting on a shelf.
- They are supported by the gold price rally, driven mainly by uncertainty brought by Trump’s tariffs, which boosted gold’s safe-haven appeal.
Institutional Investor Reactions
As the price of silver fell, the Hunt brothers were forced to pay millions of dollars each day to cover their calls and interest fees. Silver Thursday, the biggest single-day loss in the history of the silver market. Silver lost over 50% in one day – and the Hunt brothers lost billions. If the London Metal Exchange (LME) had not paused and reversed trades during the short squeeze, Guangda stood to lose billions of dollars as the price of silver skyrocketed.
Will Rhind: Gold at All-time High, but Price Still Looks Undervalued
- Building on the momentum of the Reddit-born retail trade warriors made famous by squeezing the shorts in GameStop, a Wall Street Silver channel was created.
- Discovery Alert’s coverage includes a wide range of sectors within the mining industry including, geology, macro events affecting commodities, spanning gold, battery metals, rare earth elements, and other key commodities.
- As you can see from the 5-minute intraday chart, silver staged a powerful breakout, surging $1 per ounce (3%) during the Asian and European trading sessions.
- And then you’re melting it and you’re dissolving any chemical reactions.
But there’s always a certain amount of pipeline in between and unallocated is that metal. It’s not that there isn’t metal to back the claims of those unallocated account holders. It’s that the metal is not in the form of a bar with a serial number sitting on a shelf. Your nfp forecast metal is anywhere, somewhere between doré and liquid being cast into bars. I called all the engineers into the conference room and I coined the term sniff test. From now on, before we send anything, we’re going to give it a basic sniff test.
But anyways, reading the comments, half of them were like, “oh my God, what an incredible fraud! ” And the other half were like, “yeah, that’s going to collapse the entire banking system and destroy the US economy. ” And all these people all these bros are like high fiving each other. You want to bring about the collapse of civilization and you’re cheering and you think that’s a good thing?? So I think there’s a little bit of that like the Joker in Batman, some people just want to see the world burn. But I think probably the sweet spot in the middle is people who get this idea.
Gary Wagner: Gold Thriving Amid Uncertainty, Price Uptrend Isn’t Over
On the other hand, short squeezes are more likely to happen in stocks with small market capitalization and small floats (and with high short-interest ratio). However, the gold market is much bigger, with a capitalization in the trillions of dollars. It is also a very liquid market – the average daily trading volume for gold ranks among the largest financial assets in the world. In 2017, it was almost $200 billion per day in over-the-counter transactions (e.g., in London market), futures, and ETFs.
Final Thoughts: Understanding the Silver Short Squeeze
“The market fails to recognize that silver grades globally have declined by 50% over the past three decades,” explains mining engineer Keith Neumeyer. “High-grade, primary silver deposits are increasingly rare geological phenomena.” Multiple factors are contributing to the tightening silver supply situation, creating the fundamental conditions necessary for a potential squeeze. Jeremy began his career in 2006 as a Journalist at CTV (Canada’s largest network), initially engaging audiences as an entertainment reporter before pivoting to business reporting focusing on mining and small-caps. His macro-financial and market trends analysis made him a sought-after commentator on CTV Morning Live and a regular on CTV News Network.
Understand why historic discoveries can generate substantial returns by visiting Discovery Alert’s dedicated discoveries page and begin your 30-day free trial today to position yourself ahead of the market. “The $500 silver scenario isn’t about normal market operation – it’s about systemic failure of the current trading architecture,” explains precious metals strategist Andrew Maguire. A genuine silver squeeze would likely manifest through specific market dynamics rather than simply through coordinated retail buying. Kitco NEWS has a diverse team of journalists reporting on the economy, stock markets, commodities, cryptocurrencies, mining and metals with accuracy and objectivity. A second wave is coming—and it could reshape the silver market overnight. Whether you’re a seasoned investor or just starting to protect your wealth, understanding what’s driving this next squeeze is critical.
This calculated suppression is designed to demoralize existing silver investors, discourage new participants, and ensure that silver’s price languishes, preventing momentum from building in its favor. Bullion banks are typically members of the London Bullion Market Association (LBMA), the leading authority overseeing the global over-the-counter (OTC) precious metals market. This dominant position allows them to exert significant influence over silver prices, making manipulation not just possible, but systemic. The Reddit forum WallStreetBets demonstrated the potential of coordinated retail action during early 2021, when members promoted a silver squeeze following their successful GameStop short squeeze.
Conversely, if silver lags behind money supply growth, it suggests a potential period of strength ahead. Since the mid-2010s, an introduction to fundamental analysis in forex silver has slightly lagged behind M2 growth, which, combined with other factors discussed in this piece, position it for a strong rally. Contrary to the rumblings of some analysts in the precious metals space, there is little reason to suspect that we are currently experiencing a silver short squeeze.
