Last week, the actions of r/WallStreetBets saw the stock price of the US gaming retailer rocket from $20 in early January, to $350 by close of trading in New York on Wednesday 27 January – an increase of 1,744% in a matter of days.
It is thought the same might be about to happen with silver, though experts – and even many members of the subreddit itself – warn the same effect will be much harder to replicate.
As prices increased, US bullion broker Apmex warned that it expects delays in processing transactions due to a surge of orders, with a “dramatic shift in silver demand” forcing the company to stop sales over the weekend.
Here is everything you need to know about it.
What is happening?
r/WallStreetBets is a subreddit – an online community hosted on Reddit – of casual traders who play the markets and, as Vox put it, treat each investment “like a spin at the roulette wheel than a long-term strategy to build wealth” with strategies suggested by posters often all or nothing ventures.
The subreddit has over one million subscribers and is billed as the “Wild West of investing advice” – the page has a history of delivering both successes and failures to followers.
GameStop’s stock was chosen by the community last week as a battleground to take on short sellers, usually multi-billion dollar investment funds who stand to profit from stock which decreases significantly in value over a period of time.
It is thought the same might be happening for silver, as prices continue to increase. Though many are warning against trying to pull the same move, even those on r/WallStreetBets themselves.
Is it going to work?
In fact, the subreddit is fairly quiet when it comes to the discussion of silver, with many of those commenting suggesting a conspiracy.
They believe that the price of silver is rising due to otherwise normal market factors outside of WallStreetBets, but big business is trying to spin events so that it would appear that casual traders are to blame for its increase.
This – they posit – would encourage more casual traders to pile in to silver (perhaps trading in their GameStop shares to do so) in an attempt to capture some of the financial fairy dust for themselves.
While this could drive the price up higher, one prominent post warns against a silver squeeze, saying traders would be “directly putting money into the pockets of the exact hedge funds” the race to buy GameStop stocks was designed to spite.
Away from the frenzy of WallStreetBets, finance experts argue that creating a squeeze on silver is much harder to do, with Bloomberg explaining that the market for silver is “by some measures much deeper” than those for smaller stocks like GameStop.
"The bricks-and-mortar video game retailer had a market capitalisation of about $1.4 billion in mid-January," they say. “By contrast, the value of silver sitting in vaults in London is alone worth about $48 billion.”
How much does silver cost?
At the time of writing, silver is priced at £21.85 per ounce.
Just a week ago, it was around £18 for the same measure.