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Silver shines today, rising 5%. Is this just the beginning?
The squeeze in GME is one for the record books but 40 years ago, one of the all-time great market corners led to a legendary squeeze that most WallStreetBets users have never heard about.
It was executed perfectly by the Hunt brothers who were the sons of an oil billionaire. They repeatedly bought silver futures contracts but instead of cash settlement, they opted for physical delivery.
At the same time, they were preaching about the value of silver at a time the US dollar was struggling and the result was a spike in silver prices to $50 and they controlled about two-thirds of the entire physical market (excluding central banks).
Eventually, regulators stepped in (sound familiar) and prevented anyone from initiating new buying positions in the silver futures market. The Fed also strongly encouraged banks to stop making speculative loans. Since they were over-leveraged they ended up taking a beating on the reversal and were later fined heavily.
The mythical story is one that some traders on WallStreetBets are trying to rekindle. The futures market is a mix of physical metal and futures trading but the SLV ETF takes physical delivery of the metal. The idea is that by buying shares, they could put the pressure on the physical market and a spike.
So far, it’s working with silver up 5% today.
What WSB has now is a bit of mystique and that creates its own power as shorts get out of the way and people try to frontrun the moves.
Ultimately, I don’t think it can end up in a place where the market is cornered like in 1980 but you’d hate to bet against the hordes of retail traders at the moment.
Volume in SLV today is the 4th highest of any instrument today with 1.23B shares changing hands.