Price of silver soars as Reddit army targets 'new GameStop'

The price of silver has soared to an eight-year-high as the online trading movement fuelling the rise of neglected shares like GameStop target the precious metal.

Silver futures jumped almost 12% on Monday to over $30 per ounce as amateur investors turned their attention to the latest market strategy to emerge from the “WallStreetBets” forum on Reddit.

In the wake of the surge, coin-selling websites were swamped with demand while silver-mining stocks leapt.

In a reversal of financial power, an online army of Reddit traders have over the past week rallied to defend out-of-favour companies such as GameStop and AMC.

The swell in demand caused a major problem for short sellers betting against the company who were hoping for the stock price to fall.

The thinking is that if the price goes up enough for an extended period of time, the big investors who bet against gold and silver would eventually have to reverse those trades, buying back in - and pushing the price even higher.

That is partly what helped fuel a massive surge in GameStop last week.

• Is the Gamestop frenzy all about making a profit, or is it something more?

• GameStop: How Reddit users made billions of dollars at the expense of US hedge funds

The silver market frenzy also extended to physical demand for the metal, with coin dealers reporting delays in deliveries as they were overwhelmed by demand.

The Silver Mountain, a Netherlands-based bullion dealer, said on its website, said that, “Due to extreme market volatility we cannot accept any new orders at this moment,” adding it hoped to reopen by the afternoon.

Australian mining stocks shares soared, even those that have yet to start producing any of the metal. Silver Mines Ltd., which is working on undeveloped deposit, jumped 50% on Monday, while other mining shares on the Australian Stock Exchange saw double-digit gains.