The Silver Wave of February 2021

Almost 5 months in and 2021 has already been a whirlwind. First off, the online Reddit community of r/wallstreetbets joined forces to drive up shares of GameStop, a US game retailer. Why? To throw a wrench in the plans of Wall Street hedge funds who were trying to short this stock. What happened? Well, long story short, hedge funds lost a lot of money.

Online forums then switched their attention to silver. However, you can’t really compare the price of silver to GameStop. Silver is notoriously volatile with a history of dramatic spikes and drops whereas GameStop…not so much.

The general consensus is that the silver squeeze, in general, failed in its goal. The reasons for this are numerous, but we can say that silver as a commodity is incomparable to GameStop shares. Silver is much more complicated and there is a physical element that was not present previously.

Along with silver’s popular use in jewellery, it’s often associated with gold and with gold price movements. Despite the failed outcome of the Silver squeeze, there was a buying frenzy and a number of coin and small bar supplies began to run out of stock. Some even made the decision to stop selling silver for 24 hours!

We spoke to The Royal Mint to get their perspective! Andrew Dickey, Divisional director for precious metals gave us his opinion.

What was the impact of Jan/Feb's silver wave on the Royal Mint?

The Reddit situation had a major impact on sales of silver all over the world and we have experienced record-breaking demand for silver coins and bars at The Royal Mint since January.

What are your market predictions over the next 6-12 months?

The future of silver looks extremely interesting. Consumption in industries such as electronics, solar panels, and water purification accounts for around two-thirds of the silver market. As President Joe Biden outlines his commitment to the green agenda, this could progress the utilisation of these clean technologies, which will, in turn, increase global demand for silver.

https://stonexbullion.com Managing Director Daniel Marburger comments ‘With inflation picking up at a decent speed, we see commodities moving higher in price across the board. Due to the reddit frenzy, physical silver has seen an extraordinary spike in demand and mints can hardly cope with it. Delivery time for 20.000 oz of silver is around 2-4 weeks with the Royal Mint at the current stage. Direct distributors such as StoneX Bullion are given allocations only. In fact, prices for physical silver have risen dramatically over the past couple of months already due to the very limited supply.’

If you have any further questions, feel free to reach out to our fantastic team at customercare@stonexbullion.com, they will be more than happy to help you out!