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GameStop, Reddit Frenzy and Silver ETFs

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Silver prices surged to their highest level in eight years yesterday as retail trading frenzy moved from GameStop (GME - Free Report) to silver. Reddit’s WallStreetBets forum decided to bet on silver after their successful short squeeze on some heavily shorted stocks.

Investors piled into silver bars and coins online, physically backed silver ETFs and silver miner shares. Silver ETFs have recorded billions in inflows over the past few days. Major online sellers had to stop selling silver due to a sudden spike in demand.

However, the silver market is much deeper and larger than those for heavily shorted stocks. Further, unlike those stocks, many hedge funds and Wall Street institutions are long silver.

Therefore, the silver rally is already fizzling while other shorted stocks are tumbling today.

Precious metals, silver in particular, had done quite well last year thanks to coronavirus related uncertainty, unprecedented fiscal and monetary stimulus, and a weaker dollar. Rock bottom interest rates further boosted the appeal of precious metals as these don’t yield any income.

Unlike gold, silver has many industrial uses from electronics to solar panels and could benefit from a global economic rebound in the coming months.

Physically backed silver ETFs—iShares Silver Trust (SLV - Free Report) and Aberdeen Standard Physical Silver Shares ETF (SIVR - Free Report) —have surged over 62% over the past year. Silver mining ETFs include Global X Silver Miners ETF (SIL - Free Report) , ETFMG Prime Junior Silver Miners ETF (SILJ - Free Report) and iShares MSCI Global Silver and Metals Miners ETF (SLVP - Free Report) . To learn more about these ETFs, please watch the short video above.

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