If you’re wondering why so many people are buying silver now, you’ll find this article interesting. It seems like everyone’s buying physical silver, and there are tons of discussions about it online. That’s why many people rush to buy silver coins or financial instruments.
I assume it’s not true that everyone buys silver. Social media and journals amplify a phenomenon, as they’ve done with other assets. In this article, I’ll explain the factors that led to this new trend.
Finance is a game, and smart money is usually the one rigging the game. The Wall Street spectrum finally arrives, while some trends seem to start from bottom to top.
There are no markets free from manipulation. There are a million ways to speculate about the choices of small savers. You can make money from every trend, but sometimes there’s a catch.
Many investors say that silver is one of the most manipulated by “the smart money” because it’s easy to move the price. Unlike gold, silver is much more like a commodity than a haven.
Silver is worthwhile in industry, and new technologies will require more of it for new products.
Gold and silver prices often move together. We can create a spread-chart to understand the relative strength of the two minerals.
Like gold, silver is a limited resource that must be mined. The relationship between gold and silver seems disproportionate.
According to this analysis, silver should be worth a lot more than gold. Let’s find out how the silver-buying craze got started and grew.
Reddit: The Rise of Wall Street Silver
After Gamestop went viral on Reddit, another group began to grow followers. Wall Street Silver is a Reddit group that was started in January 2021, and it’s trendy with hundreds of posts every day.
Like Gamestop, Wall Street Silver is run by a group of people who have a common goal. In this other article, I answer the question: Can Reddit beat Wall Street’s hedge funds?
The group argues that the big bank keeps silver prices low on purpose. The large investment banks should indeed lead to rising prices, but this would not happen because of the enormous industrial use of silver.
This group fights against large investors and manipulators, and they do it with a precise design. Reddit users buy and accumulate physical silver to make it hard for big banks to keep prices low.
Many believe that silver will become the future currency when fiat currencies disappear and the system collapses.
On Reddit, many users post photos of their physical silver purchases and bullish analyses. #Silversqueeze is a hashtag that we can use to find memes against Wall Street and towards silver.
Because of these large purchases, some silver coin dealers are sometimes unable to fill orders. Silver raids are organized where users buy large quantities of coins or bars on the same day. There’s also a lot of abusive advertising on the street for silver.
Silver and inflation fears
Reddit is a small world, and it’s hard to reach private investors with higher capital. Just like Gamestop, newspapers are getting into the new trend.
Meanwhile, there’s constant hammering about the fear of an imminent phase of hyperinflation. A lot of analysts recommend buying physical assets like gold, silver, or real estate. In this previous article, I examine the opportunity to buy a property to defend against inflation.
The media likes to terrorize people. It’s an old way of advertising that still works well. Once the fear of inflation is in place, it’s easy to get the message “buy silver now, or you’ll lose your money.”
Wall Street is interested in communicating this message. When you push on a financial instrument, the money goes, sharks come, and someone usually makes a profit.
Although the Reddit movement is undoubtedly genuine, Wall Street has repeatedly influenced big media.
When investors start buying silver, someone will have to sell it and give the market liquidity. The options market is a crucial tool for profiting from falling prices (short squeeze).
It’s important to read between the lines and evaluate every news story and analysis objectively regarding investing.
This is why I see people writing “Buy silver now” everywhere. In this article, I won’t analyze whether it’s a good time to buy silver. I can only say it’s dangerous because you read it on social media.
Social media’s role in financial decision-making
We all know how the Internet industry works, but sometimes we forget. Let’s say we’ve found a post related to silver, and then social networks will propose the same topic again.
Facebook, Twitter, or Reddit is for keeping us connected. After reading a few posts about the silver squeeze, I was re-proposed to similar posts on social media. At some point, we’ll get the impression that everyone online is buying physical silver to defend their savings.
This thought will creep into our heads like a woodworm, so we’re going to do some more in-depth research. The mantra “Why not buy silver?” stays in our minds after repeated research.
Joining a Reddit group gives you a sense of sharing and belonging to a community. This will lead some people not to assess the real risks and to expose themselves financially more.
Advertising has always worked this way, forcing us to buy all kinds of products; it works even better online.
But when it comes to investing, it’s risky to follow this type of mental manipulation. Some are hoarding physical silver without any rules on money management.
Humans are social animals, so we feel more comfortable working together. Seeing other people buy large amounts of a financial asset triggers two mental biases.
The first is fear of missing out on this investment everyone’s making and then regretting it. The second is the sense of community that you feel when you’re doing something that many other people are doing and sharing the sadness of the loss.
Why is everyone buying silver now? Conclusion
So if you wondered why everyone’s buying silver, the question is probably wrong. The right question to ask is, “Does everyone buy silver?” And the answer is no.
People are doing this, but social media and search engines are amplifying it. This movement probably won’t lead to a shortage of silver and an increase in prices. I recommend reading all the news critically, analyzing the risks, and assessing what might go wrong.
Silver could reach gold’s price in a few years, as it could fall or stay the same. It won’t be a group of Redditors or private investors who will move the market. Wall Street has incredible firepower and can make an asset rise or fall in no time.
Smart money keeps a low profile when they accumulate positions on an asset. They only start talking about it when the price has already gone up, and they have to sell and make a profit.
Having a portion of safe assets like gold and silver in your portfolio can be an intelligent decision, but it shouldn’t become a crusade. A financial decision must first meet the criteria of money management.
When investing in silver, be sure to think about the environmental costs. Some of the most common side effects are soil erosion, deforestation, and water pollution.