Silver spikes 13% to 8-year high as Reddit day traders turn their buying power towards a fresh target

• Silver jumped as much as 13% on Monday as amateur investors piled in, before slipping back slightly.
• The so-called silver squeeze follows the Reddit-driven surge in GameStop shares last week.
• But the rally sparked controversy on Reddit, with users saying GameStop should remain the target.

The price of silver on Monday jumped as much as 13%, to $30.35 per ounce, hitting an 8-year high. The surge pushed up shares of silver-mining companies and causing retail sites to limit trading amid the latest attempt of amateur investors to squeeze Wall Street.

Silver pared gains to trade 8% higher, at $29.01 per ounce, as of 11:45 a.m. ET in New York.

But the so-called silver squeeze proved controversial on the Reddit forum Wall Street Bets. Many users argued that the army of day traders should keep targeting GameStop shares and not shift their sights elsewhere.

Last week, traders organizing themselves on Reddit realized their power when they bid up GameStop shares by around 400%. The surge hit hedge funds and others who had been betting the price would fall, costing them more than $19 billion.

On Monday morning, the pivot towards other targets picked up speed, with the hashtag #silversqueeze trending on Twitter. Online financial personalities were cheering on day traders, with bitcoin investor Cameron Winklevoss tweeting: "If Silver market is proven to be fraudulent, you better believe Gold market will be next."

The silver price has risen around 16% over the last five days as Wall Street Bets members have encouraged each other to buy up the metal in the belief that major financial institutions are betting against it.

Read more: Buy these 4 stocks poised benefit from a spike in silver prices, says RBC Capital Markets - including two set to soar 73%

However, the latest data from the US regulator showed money managers are on balance betting the price will rise.

BlackRock's iShares Silver Trust surged as much as 12% on Monday as retail investors piled into exchange-traded funds, which give them access to silver. iShares Silver, the world's biggest silver ETF, saw inflows of close to $1 billion on Friday.

Shares in companies in the industry jumped. Pan American Silver Corporation's shares rose 12.3% while miner Fresnillo's London shares climbed 9.8%.

Silver retail sites were left struggling to keep up with the demand. Money Metals said it would be limiting silver orders due to "extreme demand". APMEX said it was expecting processing delays of up to three days.

The move into silver was controversial on the Reddit forum Wall Street Bets, which has driven the GameStop frenzy. Some users noted that huge investment banks, and the hedge fund Citadel Advisors, were the biggest holders of the iShares Silver ETF.

Read more: Buy these 26 heavily shorted stocks as retail traders trigger wild rallies in Wall Street's least-liked names, Wells Fargo says

"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," one user posted. Others said the Reddit army should focus their efforts on driving up the GameStop share price, which was down around 25% by mid-morning.

Adrian Ash, director of research at precious-metals platform BullionVault, told Insider: "The sudden inflow of money driving this spike will also need to be sustained and repeated if silver is going to run higher.

"The basis for Reddit's 'silver squeeze' is flimsy at best. Speculative short-selling in silver has been very tame in New Year 2021, and the commercial side of the industry will only grow its price-hedging the higher it goes. So there just isn't the structural opportunity which a heavily shorted small company might offer."