The Real Silver Squeeze Lies Ahead

TEMPORARILY OUT OF STOCK.

That’s the message most hopeful physical silver buyers have been getting since the last days of January. Odds are bullion dealers going to have a tough time keeping any silver in stock.

Everyone is buying, and no one is selling the physical metal. Dealers are asking for 35% premiums…and that’s if you can get your hands on any silver at all.

And yet I remember well, less than a year ago in mid-March, when the world started a major lockdown in response to the Covid-19 pandemic. Gold and silver bullion dealers were nearly completely sold out within days. In some cases, silver premiums reached historic highs, near 100% of spot prices.

In the recent #silversqueeze hype, silver traded at an 8-year high, as demand was exploding. Silver’s given back $2 since its $29 peak on Feb. 1. But it’s still up 20% since late November and has gained 125% since its March lows.

And silver stocks have been surging. It’s all related to the now-infamous WallStreetBets calls to action, the latest of which targeted silver. It was enough to cause the Comex to raise silver margins by 18% after just two up days. 

But silver’s story is still in its early days. Dramatically higher silver prices are still squarely ahead.

Here’s What Really Happened to Silver

A Reddit subgroup called WallStreetBets sent out a call-to-action to buy silver on January 28th. Retail investors piled in en masse and kept doing so on Friday, Jan. 29, and Monday, Feb. 1.By Sunday, January 31st, most bullion dealers were outright sold out. By Monday, February 1st, silver was up nearly 8% from the Friday close.

Silver had gained almost 20% in just three trading days.

(Click on image to enlarge)

Silver had soared to an 8-year high. Silver stocks were ripping higher, and many were seeing their trading volumes explode anywhere from 6-10 times normal levels.

The Global X Silver Miners ETF NYSE: SIL) went from $40 to $49 in just three days. The ETFMG Prime Junior Silver Miners ETF (NYSE: SILJ) went from $13.60 to $17.80 in that same time.

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Disclosure: I am long SIL and SILJ.

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Anne Barry 4 weeks ago Member's comment

Nah, i think the fear is overblown.