Will there be a new silver squeeze?

Reddit's forum has been rumoured for the last few days about a new silver squeeze. In a new post on Reddit refers to an article about silver that appeared on Sprott Money earlier this month. The article is devoted to the great drop in the price of silver that took place this time ten years ago. The price then made a huge price drop in one day, the exact reason for which is still not clear.

On Friday, April 29, 2011, the price was still at $48.50 per troy ounce at the close of trading, but when trading in Asia reopened on Sunday evening, the price plunged down by $6.50 per troy ounce in a few minutes. A week later and a number of margin increases later, the silver price had fallen further, to $34 per troy ounce.

According to Sprott Money, a Canadian precious metals trader, now is the time to buy silver and explode the price of silver. In The article calls on the trader to buy silver en masse. We also see several videos on YouTube about a new silver squeeze, which should take place on May 1. This is exactly ten years after the Silver price plummeted and many speculators in the silver market lost money.

New call on Reddit to buy silver en masse on May 1

Silver Squeeze

In February, there was a run on investment silver, after investors urged each other on Reddit to buy silver. In no time at all, the stocks of investment coins were complete exhausted. Investors also flocked to silver ETFs, investment products that hold a physical silver stock. At the time, the huge demand for silver resulted in longer delivery times and higher premiums on investment coins, but there was no question of a total disruption of the market. The largest silver ETF had More time needed to buy the necessary silver, but there was no shortage of precious metals.

We are following this new development with great interest, but also with the necessary skepticism. As we wrote earlier, the silver market is much bigger than the market for Silver Investment Coins. A shortage of coins is therefore not the same as a shortage of silver. We also wrote earlier that the large Bullion banks It is not for nothing that they hold huge short positions in silver. They do not do this to speculate on a price drop, but to increase their physical stocks cover.

The silver squeeze was also visible on Google Trends

Shortage in the silver market?

If enough people buy silver, there can indeed be an acute scarcity that can drive up the price further. For that to happen, the silver squeeze must be larger than that of February. At that time, there was a temporary shortage of silver coins, but not of silver. However, the premiums on silver continued to rise at that time.

It also remains to be seen whether the silver futures market can 'collapse', as some claim. All silver contracts can be settled in cash, even if silver is not available. We previously wrote about this in the Necessary Articles. However, a higher demand for investment silver as a result of low interest rates and increasing industrial demand may have a positive effect on the silver price in the longer term. 

This contribution was made from Geotrendlines