In this arranged photo in London, United Kingdom, on April 4, 2013, a one kilo gold ingot sits on top of silver ingots at London gold traders Gold Investments.
Simon Dawson | Bloomberg | Getty Images
Silver futures contracts rose higher Sunday evening as the Reddit-fueled boom in strongly short stocks appears to be spreading to the metal market.
Silver futures gained 8% shortly after the futures market opened, which was the largest movement in futures since 2013. Contracts last traded 6.8%.
The sharp rise late last week builds on gains for silver and silver-related stocks. Silver mining stocks Coeur Mining and Pan American Silver rose 16.9% and 14.7% respectively on Thursday and Friday. The iShares Silver Trust rose 6.7% during those two sessions.
The spike in silver demand appears to be related to retailers on the Reddit forum WallStreetBets, which has helped boost trading activity in high-short stocks such as GameStop and AMC Entertainment in recent weeks.
The forum had several active threads devoted to silver on Sunday evening. The phrase “#silversqueeze” was also popular on Twitter.
The move in silver has been touted by investors optimistic about cryptocurrencies such as Bitcoin, who see the new digital assets as a partial replacement for traditional metals.
Cameron Winklevoss, co-founder of cryptocurrency firm Gemini, said on twitter that: “The consequences of a #silversqueeze cannot be underestimated. If it is revealed that there are more paper claims on silver than real silver, not only would the payout be huge, but gold would be next. #Bitcoin solves this. “
The dramatic spikes in GameStop and other high short stocks were due in part to a short squeeze, a phenomenon where investors who have bet against a stock are forced to buy stocks to cover their positions as the name gets higher.
Melvin Capital, one of the hedge funds that originally had short positions in GameStop, lost 53% in January.