Silver rallied by as much as 13% on Monday, February 1st to their highest intraday level since 2013, as a buying frenzy attributed to a post on Reddit last week suggesting a short squeeze on the precious and industrial metal continued. Silver futures for March delivery climbed to as high as $30.35 an ounce on Comex.
MarketWatch covered the rally on silver in a story that was also picked up by Morningstar. They spoke with Zach Abraham and several others familiar with what was taking place. Here are Zach’s comments:
The moves for the metal are “incredibly unusual — fair to say it’s unprecedented,” Zach Abraham, chief investment officer at Bulwark Capital Management, told MarketWatch.
“But we need to see if it can be done again. Remember, GME [GameStop] was a deeply undervalued and unique situation,” he said.
So far, what’s happened to silver in the last few days is “not even close” to what happened with the Hunt brothers, said Bulwark Capital’s Abraham, referring to the brothers who famously tried to corner the silver market four decades ago. During the Hunt brothers’ accumulation of the silver, prices of silver bullion rose from $11 an ounce in September 1979 to $49.45 an ounce in January 1980.
“In addition, they don’t control anything,” he said, referring to the Reddit crowd. “I think for this reason alone, going after a commodity like silver is futile.”
Still, many analysts had already been touting upbeat prospects for silver even before the Reddit-induced frenzy.
Abraham said his company invested in silver on expectations that a short squeeze in silver would occur, and didn’t take the Reddit WallStreetBets forum into consideration when investing.
“Silver is still cheap. Not a bad idea to buy some for the long haul,” he said. “Might make sense to buy silver miners as well. Just know both can be extremely volatile.”
He believes that $100 silver prices aren’t out of the question during the next run for the metal. “Silver is horrifically undervalued, on a historical basis, compared to financial assets.”
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