Unprecedented desire for silver has continued over the weekend, causing the physical market to be unable to meed demands.
After starting the huge short-squeezes in Gamestop and AMC, investors on social media made a push into silver. The Wall Street Bets chat room on Reddit was among the leaders of the push with its thread titled: ‘The largest short squeeze $SLV Silver to 1000$.’
The movement of investors into silver has led to an impressive gain for the metal. March silver futures ended Friday at around $27 per ounce, for a total 5% increase.
In expectations of a huge Sunday, investors have been buying physical silver. Many dealers have been forced to stop online orders due to the shocking demand, confronted with price uncertainty.
Even as silver sees good gains and might see even higher gains, many analysts are sounding the alarm that investors should be wary of this market.
During an interview, Peter Hug, the trading director at Kitco Metals, stated that while there is great supply of silver products, the pandemic has led to a shortage of bars and coins, so this increase in demand is causing a lot of problems in the market.
He went on to say that overall, he anticipates silver to go higher, but investors should practice caution in the current environment.
“I believe silver priced at $27 gives long-term value, however investors should be careful,” he stated.
More analysts are issuing the same concerns. Ole Hansen, leader of commodity strategy inside Saxo Bank, predicted that even though silver had good increases last week, those gains were within the average volatility. He went on to say that traders and investors should watch major technical signs, with great resistance at $28 per ounce.
“Silver has made a large shift, but the action has not broken any overall trends, so we must wait to see how large or small the momentum is,” he stated.
While silver maintains the room to move higher in the short-term, Hansen says there is not enough short positioning to lead to a major squeeze. Hansen went on to say he is bullish on the metal; but, it will be hard for the market to keep gains as gold prices sit below $1,900 per ounce.