The Reddit forum r/wallstreetbets (WSB) has ignited another social media frenzy, this time targeting the silver market. Following the epic GameStop (GME) short squeeze, WSB participants attempted to drive silver prices to $1,000 per ounce through coordinated buying of futures and physical bullion. However, the so-called "silver squeeze" (#silversqueeze) quickly became mired in controversy, as a significant faction within WSB accused hedge funds of orchestrating the move to cover losses from the GME short squeeze.
The Controversy: Were Hedge Funds Behind the Silver Squeeze?
The original silver squeeze post on r/wallstreetbets was deleted by Reddit admins, but not before it went viral. Many WSB users pointed out that Citadel is the fifth-largest holder of silver, and Melvin Capital also holds substantial silver positions. They argued that these hedge funds were using the silver squeeze to divert attention and offload their holdings onto retail investors. One user warned: "Citadel is the 5th largest owner of silver; it’s imperative we do not squeeze it. These are hedge fund bots spamming awards." Another post expressed similar distrust, claiming the push for silver was a trap. On the other hand, free-market proponents and silver bugs saw it as a legitimate opportunity to attack the manipulated silver market. The debate split the WSB community, with some members harassing anyone posting about silver.
Market Reaction: Physical Silver Demand Goes Through the Roof
Despite the internal strife, the silver market witnessed a genuine surge. On Monday morning, spot silver briefly broke above $30 per troy ounce, reaching a high of $30.35, up more than 12% from Friday’s close of $27. The most dramatic impact was felt in the physical bullion market. Major dealers like APMEX, SD Bullion, and Provident reported that silver bars and coins were either sold out or heavily marked up. Ken Lewis, CEO of APMEX, stated: "In the last week, we have seen a dramatic shift in Silver demand from our customers. Once markets closed on Friday, we saw demand hit as much as six times a typical business day and more than 12 times a normal weekend day. On Saturday alone, we added as many new customers as we usually add in a week." SD Bullion disclosed that it sold nearly 10 times the normal volume of silver ounces. Silver American Eagles were completely sold out across multiple dealers, with premiums reaching as high as 45% over spot prices.
Price Action and Outlook
Silver futures also rallied strongly on Monday before retreating slightly. By the afternoon, spot silver was hovering around $29.70. The controversy took a toll on GameStop shares, which fell sharply on Monday, adding to the tension among retail traders. Analysts cautioned that silver’s industrial demand fundamentals might limit the impact of short-term speculative frenzy. However, the event once again demonstrated the immense power of social media to move asset prices. Whether the silver squeeze is a genuine grassroots movement or a hedge fund conspiracy remains unclear, but the battle for silver has certainly captured the world’s attention.