Johannes Eisele / AFP / Getty Images
- Global stocks skyrocketed Monday as the army of retail investors turned a new treasure: silver.
- The largest silver-backed ETF in the world posted a record inflow of $ 1 billion on Friday, the FT reported.
- Silver surfers drove the London benchmark and UK mining stocks higher on the new short squeeze.
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Global stocks rallied Monday as retail investors shifted their focus to the silver market, showing that the Reddit frenzy has spread from stocks and cryptocurrencies to precious metals.
The S&P 500, Dow Jones and Nasdaq gained between 0.8% and 1%, indicating a higher opening to US market indices later in the day.
On Sunday, a group of 10 Republican senators proposed an alternative economic plan worth $ 600 billion compared to President Joe Biden’s $ 1.9 trillion emergency plan. While the GOP’s latest proposal is much smaller than Biden’s, markets reacted positively as it suggests talks could get back on track.
Silver was up nearly 12% Monday, from just under $ 25 to over $ 30, the highest level since August last year as the world’s largest silver-backed ETF, the i-Shares Silver Trust, hit record inflow of $ 1 billion. to the Financial Times.
“While it is much more difficult to move this market compared to smaller stocks like GameStop, last week’s events showed that the impact of the shopping frenzy should not be underestimated,” said Milan Cutkovic, market analyst at AxiCorp.
The impact of the r / wallstreetbets move caused massive volatility in US markets last week, leading short sellers to anticipate a further explosion of nostalgic stocks. According to Mark Haefele, chief investment officer of UBS Global Wealth Management, the volatility was driven by market positioning rather than growth concerns.
Read more: Bank of America warns of 3 impending catalysts that could crash the bull market in 2021 – and shares how to position for the ‘big change’ as the WallStreetBets crowd fights against the system
“There is little doubt that the massive central bank liquidity and government stimulus controls in the hands of the understaffed / leave (through no fault of their own) private investors will be a big part of this bubble story,” said Jim Reid, a general manager. . of cross-asset research at Deutsche Bank.
Silver bulls began to impact prices elsewhere, pushing the London benchmark and mining stocks higher.
The UK FTSE 100 was up 0.8%, the Euro Stoxx 50 was up 1.3% and the German DAX was up 1.4%. Miners Glencore and Anglo American, the front runners, were up 3% and 2.7% respectively.
However, Connor Campbell, a financial analyst at SpreadEx, noted there is speculation that Reddit isn’t necessarily behind the latest move.
“While there are pro-silver posts on WallStreetBets, the ‘top post’ on this topic is against the trade and claims that by going long on silver you would put money directly in the pockets of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $ GME ‘, ”he said. The same poster also stated that the short squeeze was ‘a hedge fund coordinated attack so they can keep fighting the $ GME battle’.
Elsewhere in Asia, China recorded a decline in a major business activity index as the resurgence of the coronavirus affected overall sentiment. The lower Purchasing Managers Index suggests momentum has slowed for now, although the pan-Asian recovery is maintaining its upward trend, said Jeffrey Halley, a senior market analyst at OANDA.
China’s Shanghai Composite rose 0.6%, Japan’s Nikkei 1.5% and Hong Kong’s Hang Seng 2%.
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