Silver price: Why has price of Silver soared? What is causing the price rise?

Retail traders are honing in on silver on Monday the same way they have driven the likes of GameStop over the last week. The price of silver has soared by a huge 10.46 percent according to Bullion by Post, which says after experiencing a monthly low of £17.97, the metal value has soared to a high of £21.38, down from £21.89 this morning. The news comes after social media platform Reddit drove up stock prices over the weekend, much to the dismay of Wall Street stock traders.

The group decided to invest into the metal as some of the US’s official financial institutions, such as Wall Street, were betting the price would fall.

Stuart Clark, portfolio manager at Quilter investors, explained to “Silver has surged after the attention of the Reddit investors turned from the likes of GameStop and Nokia to the commodity, after it was revealed many of the largest financial institutions in the US half large short positions in silver.

“As such, this demand has caused the price to spike as amateur investors follow each other into another investment.”

A short position in terms of trading is the sale of a stock that an investor doesn’t own himself, or which is consummated by the delivery of stocks borrowed by, or for the account of the investor.

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Investors who sell stock short typically believe the price of the stock shares will fall and hope to buy the stock back at a lower price, thereby making a profit.

Short stocks are normally utilised by hedge funds and professional investors alike.

However for normal investors, the Reddit craze doesn’t spell good news for the market and their shares.

Mr Clark said: “For more traditional investors, they need to be careful. Individual shares and commodity prices are now incredibly volatile as a result of the behaviour of the day traders using Reddit to coordinate activity.

“Prices are rising well beyond what many would consider to be fair value, and if you invest now, you risk losing a considerable amount of your money.

“Silver clearly benefits from being considerably cheaper than its gold cousin, and as a result is much more accessible, having the potential to be a lot more volatile during swings in demand.”

Mr Clark said the case for silver investment in the future looks promising, however.

He concluded: “Many governments and economies are pivoting to climate friendly policies and as such, we are seeing demand increase for solar panels, electric vehicles and battery cells.

“Silver is a key component of these products, so as we emerge from lockdown there is a possibility that silver could rally further was the sustainable economy begins to take shape.”

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