Silver was one of the biggest movers to start the trading week, with the precious metal gaining as much as 7% earlier in the day.
The rally in XAGUSD saw prices reach their highest level in almost 8 years, as an influx of retail traders attempted to prop up the “undervalued” asset according to numerous reddit posts.
However, some are skeptical that the “Silver Squeeze” is following the same blueprint as we saw last week with GameStop.
One reddit thread read that, “By buying silver/going long on silver, you would be directly putting money into the pockets of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $GME 🚀 The hedge funds are LONG silver NOT short silver”.
Silver has since tailed off this morning’s rise, and now trades at $28.9.
S&P 500 climbs despite weak Manufacturing data
America’s benchmark index the S&P 500 rose on Monday, despite data showing that manufacturing activity had slowed in January.
Figures released by the Institute for Supply Management showed that production tailed off last month, as COVID-19 cases once again picked up, leading to a slimmer workforce.
Data from the ISM’s index for factory activity dropped to a reading of 58.7 in January, down from 60.5 the month prior.
Typically, a reading above 50 signals growth in manufacturing, with figures below this threshold showing contraction. So, although manufacturing had grown, it fell short of analyst expectation of 60 in January.
Despite this news, the S&P 500 was up 1.62% as of writing.
GameStop falls 25% to start the week
A few days after recording double digit daily gains, $GME started the trading week in the red.
Last week’s cult stock fell close to 30% on Monday before rebounding slightly as the short squeeze appears to have run out of momentum.
The company, which saw shares climb by as much as 400% last week, has now seen many potential winners cashing out, with chances of a mass exodus growing by the day.
This comes despite Robinhood and other brokers once again allowing traders to take long positions on the stock.
Quote of the day – “The hard part is discipline, patience and judgement.”Seth Klarman
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Senior Market Analyst