The last week of January saw a frenzy on single stocks with a lot of short positions, which were targeted by users of a group on Reddit. The group has already grown from 2 million users to 7.7 million in just two weeks. Late last week, the group focused on the silver market.
On Friday alone, BlackRock's largest silver fund BlackRock iShares Silver Trust saw a record $944 million in new capital inflows, Bloomberg reported. In turn, a wave of purchases of physical silver from suppliers from Asia to America swept through the weekend. Demand was so huge that one of the largest U.S. online silver sellers had to halt sales. Ken Lewis, CEO of Apmex, as the company is referred to, quoted by Bloomberg, said the decision to temporarily suspend silver sales was unprecedented in the company's history and that orders may take longer than usual to fill.
Silver futures opened with a roughly 7 percent upside gap and seemed to continue their rise to over $30 per ounce. This is consequently the highest price since 2013. With this, the top of the bull market that was formed from March to August was breached. That's when silver rose from around $11 to $29.
In terms of fundamental data, stalled vaccines and new infectious coronavirus strains have increased the appeal of investing in silver as a safe haven. Investors may continue to doubt whether the U.S. Congress will pass the $1.9 trillion stimulus plan put forth by the new Joe Biden administration, as Republicans are looking to begin discussions on a $600 billion plan.
In the foreign exchange market, the weakening of the Swiss franc is worth noting. The EUR/CHF pair rose from 1.0750 to 1.0820, which as a result may have helped the USD/CHF rise to its highest level since early December. Thus, the key barrier, which was located at the level of 0.8925, may have been broken.
On the other hand, the EUR/USD major currency pair fell below 1.2100, and according to traders cited by Bloomberg, sell orders may fall under 1.12050. Their execution, in turn, could help the US currency strengthen faster.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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