Silver prices surged to an eight-year high on Monday, shares in listed silver-mining companies jumped and bullion dealers were left scrambling as the Reddit army of small-time investors piled in to the metal.
Silver emerged last Thursday and Friday as the first non-equity the target of a Reddit-based retail-trading frenzy that rattled share markets last week, worrying financial markets and investors across the globe.
Spot silver leapt more than 11% in London to $US30.03 an ounce, taking gains to about 19% since last Wednesday and the price to its highest since February, 2013.
Comex silver futures were up 8.7% on Monday (just before 8am) at more than $US29.60 an ounce.
The $US16.5 billion iShares Silver Trust ETF in New York jumped 9.3% as silver broke above $US30 an ounce for the first time since 2013.
It was up 7.4% at $US26.84 in afternoon trading in New York. That was after a 5.6% gain last week.
Reuters said Friday’s retail inflows into the ETF totalled around $US950 million, equivalent to two weeks of demand, in a total annual silver market of $US25 billion, according to BMO Capital Markets.
Shares in silver miners Hecla Mining Co, Coeur Mining Inc and Wheaton Precious Metals Corp surged between 4% and 35% in New York at one stage. Hecla was one of the best with a gain of more than 23% in late afternoon trading in New York on Monday.
That was after shares in Australian miners jumped on Monday, Horizon Minerals saw an 18.8% gain, Azure Minerals saw its shares up 9.2%, Aeon metals shares were up more than 8% while Adriatic Metals shares soared nearly 20%.
Even the shares of BHP were up 1.3% (it produces more than 200,000 ounces of silver a year from Olympic Dam).
Volumes in small miners’ stocks in Australia soared and jumps in some exploration firms, which do not actually produce silver, topped 90%.
Reuters reported that a record A$40 million went into Australian ETF Securities’ Physical Silver fund on Monday, boosting the size of the $A220 million fund (Friday’s close).
Reuters reckons global short interest in silver, or the cumulative value of bets it falls in price, is equivalent to about 900 million ounces – which is just short of global annual production.
“Banks and brokers hold most of that, with about 610 million ounces, but it is not clear whether they are net short on the metal or whether their bets offset very big physical holdings,” Reuters observed.
Many of these short positions would be held on behalf of producers selling their production forward to either lock in high prices or part of a financing package for their mines.
