WallStreetBets and a silver short squeeze
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Like many investors, you may have considered adding silver to your portfolio as a way to gain exposure to another precious metal. The natural starting point is understanding how to invest in silver. With several options available, choosing the right approach can feel overwhelming at first.
This guide explores the different ways to purchase silver — including silver ETFs and alternative instruments — whether your goal is long-term investing or active trading. Silver ranks among the world’s most widely traded commodities and carries a rich historical background that adds to its appeal. While investing in silver, whether through ETFs or other vehicles, can seem complicated, the sections ahead are designed to help you identify the most suitable format and trading platform.
The positive news is that investing in silver is more accessible than ever. Today, you can gain exposure to the metal entirely online. The purpose of this article is to guide you step by step through your silver investment journey, covering key information such as:
- Different forms of silver trading, including silver ETFs
- The history of silver trading, including the biggest speculation in silver
- WallStreetBets and a silver short squeeze
Whether your first commodity to buy should be silver or not is for you to decide. We strongly suggest contacting an investment advisor, as this article is not intended to be investment advice under any circumstance.
How to Buy Silver
Silver ETF and other forms of silver trading
Alright, so after weighing your goals and options, you’ve decided you’d like to buy silver. That’s a good start. Let’s see what lies ahead of you before you can officially state that you have a position in silver. If you’d like to buy silver, there are two important things you need to do:
- Decide which form of silver you would like to trade.
- Find a broker that provides that form of silver and whose conditions suit your needs.
Below we will go through the pros and cons, and the potential fees you may encounter in each product category, namely:
Silver ETFs
What is a silver ETF?
A silver ETF is an exchange-traded fund (ETF) that focuses on silver investments. An ETF is a collection of securities (stocks, bonds, commodities and other assets) that often tracks an underlying index. ETFs are similar to mutual funds but they are listed on exchanges, and ETF shares trade throughout the day just like an ordinary stock. This is an easy way for investors to gain exposure to the price of silver, without the inconvenience of storing physical bars of the metal.
Silver ETFs usually track either physical silver or companies that are related to silver. A side note here: securities that track commodities, such as physical silver are usually called ETC or exchange-traded commodity.
If you would like to learn more about ETFs, feel free to check our article on how to buy ETFs online.
|
Can you use leverage or go short? |
No, unless you use a margin account |
|---|---|
|
What type of costs can occur? |
Commission |
|
Ticker(s) of silver ETFs* |
SLV, SIVR, SIL. AGQ |
|
Further things to consider |
Liquidity is usually high |
*These are some of the largest silver ETFs based on assets under management
Best brokers to buy silver ETFs
We selected the best brokers to buy silver ETFs based on whether the broker provides access to a silver ETF and it has favorable ETF fees:
- for US customers:
- for non-US customers:
Silver CFDs
What is a silver CFD?
A silver CFD is a financial contract that pays the difference in the settlement price between the open and closing trades (CFD is short for ‘contract for difference’). It is popular for forex and commodities products. For silver CFDs, the underlying asset can be either a silver ETF or silver forex (the above-mentioned silver categories). When you buy silver CFDs, you bet on the price change of the underlying asset. This means that:
- You don’t own the underlying silver ETF. The price of a silver ETF CFD follows the price of silver ETFs listed on exchanges.
- There is no delivery as in the case of a spot forex market. The price of a silver CFD follows the price of silver forex on the spot market.
According to ESMA regulation, the leverage on ETF CFDs is 1:5, while on XAGUSD CFDs it is 1:10. Always use a stop-loss order to manage your risk. It is important to note that even so, you may lose more during gaps (sharp breaks in the price with no trading occurring in between). In this case, the price can jump over your stop-loss level, causing higher losses than you had set up to allow. Please be aware that trading on margin and other leveraged trading strategies could be extremely risky in times of high market volatility. Sharp price moves could quickly wipe out your invested capital.
If you would like to learn more about CFDs, read our article on CFD trading.
|
Can you use leverage or go short? |
Yes |
|
What type of costs can occur? |
Spread |
|
Ticker(s) of silver CFDs |
Ticker of the underlying asset, e.g. XAGUSD, SLV |
|
Further things to consider |
Silver spot forex CFD market is open 24 hours a day, except on weekends |
Best brokers to buy silver CFDs
We selected the best brokers to buy silver CFDs based on whether the broker provides a silver CFD and it has favorable CFD fees:
- for non-US customers:
- ActivTrades
- HYCM
- AvaTrade
- XM
- eToro
Silver options
What are silver options?
A silver option is a financial instrument that is a derivative based on the value of silver. Silver options are traded through the Chicago Mercantile Exchange (CME), trading under the symbol SO. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.
A call option on silver means a financial contract that gives the owner the right, but not the obligation, to buy silver at a specified price within a specific time period.
A put option on silver means a financial contract that gives the owner the right, but not the obligation, to sell silver at a specified price within a specific time period.
If you would like to learn more about futures options trading, read our article on futures options trading.
|
Can you use leverage or profit form price decreases? |
Yes, with a put option |
|
What type of costs can occur? |
Spread |
|
Ticker(s) of silver option |
SO |
|
Further things to consider |
Great risk management tool if appropriately used |
Best brokers to buy silver options
We selected the best brokers to buy silver options based on whether the broker provides silver options and it has favorable options fees:
- for US customers:
- for non-US customers:
Silver futures
What are silver futures?
Silver futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. Similar to silver forex, silver CFDs and silver options, silver futures are leveraged and complex products. The buyer must purchase or the seller must sell the underlying asset at the pre-set price, regardless of the current market price at the expiration date.
Underlying assets include physical commodities or other financial instruments. Silver is one of the commodities you can trade as a future. In the US, silver futures are primarily traded on COMEX (Commodity Exchange).
If you would like to learn more about this type of trading, read our article on futures options trading.
|
Can you use leverage or go short? |
Yes |
|
What type of costs can occur? |
Spread |
|
Ticker(s) of silver futures |
SI (+month and year) |
|
Further things to consider |
Liquidity is high |
Best brokers to buy silver futures
We selected the best brokers to buy silver futures based on whether the broker provides silver futures and it has favorable futures fees:
- for US customers:
- for non-US customers:
Silver spot forex
What is a silver spot forex?
A silver spot forex is a spot commodity based on the price of silver and traded against the US dollar. It shows how much silver is worth against USD.
According to ESMA regulation, the leverage on XAGUSD is 1:10. Please be aware that trading on margin and other leveraged trading strategies could be extremely risky in times of high market volatility. Sharp price moves can quickly wipe out your invested capital.
Taking gaps and volatility into consideration, similar risks are associated with spot forex products as with CFDs. On the forex market, gaps primarily occur over the weekend because it is the only time the market is closed. If you want to learn more, read our article on forex trading.
|
Can you use leverage or go short? |
Yes |
|
What type of costs can occur? |
Spread |
|
Ticker(s) of silver spot forex |
XAGUSD |
|
Further things to consider |
Liquidity is high |
Best brokers to buy silver spot forex
We selected the best brokers to buy silver spot forex based on whether the broker provides silver spot forex and it has favorable forex fees:
- for US customers:
- for non-US customers:
Taxation of silver trading
Silver differs from gold in that while in the European Union the trading of recognized gold coins and bulllion products is VAT exempt, there is no such allowance for silver trading.
How to Buy Silver
History and the biggest speculation in silver trading
As a precious and industrial metal, silver can also be used as an investment. It has been regarded as a form of money and store of value for more than 4,000 years. In 2020, global silver reserves amounted to 560,000 tonnes.
The price, as with commodities, is driven by speculation, supply and demand. The price of silver is notoriously volatile compared to gold because of its smaller market and lower liquidity.
Silver often tracks the price of gold, although the ratio can vary. The gold/silver price ratio was fixed by law in the United States with the Coinage Act at 15:1 in 1972, which meant that one troy ounce (ca. 31 grams) of gold was worth 15 troy ounces of silver.
The market of silver is much smaller in value than the gold market. The London gold bullion market turns over 18 times more monetary value. Due to its smaller size, a single large investor may be able to influence the price of silver in either direction.
Around 60% of silver is used in industry and 40% for jewelry, silverware and silver bullion.
Source: Katusa research
As seen on the chart above, the price of silver fell sharply during the COVID-19 market crash in the spring of 2020, but it recovered quickly, rising 114% after the crash. The overall increase of silver was around 48% for 2020. In comparison, the S&P 500 Index rose 16% in the same year. In the first month of 2021, the price of silver went up 2.2%, while the S&P decreased by 1.1%.
The chart below shows the performance of other metals compared to silver. A strong correlation can be seen between silver and gold. Both instruments traditionally perform well in times of rising inflation.
Historical data shows that silver can experience explosive rallies — but also sharp and sudden declines. Over the past five decades, the market has witnessed two major collapses. One of the most dramatic episodes occurred in 1980 and involved the infamous attempt by the Hunt brothers to dominate the silver market.
Silver and the Hunt Brothers
More than 40 years ago, one of the largest speculative events in commodity market history unfolded. The Hunt brothers succeeded in pushing silver prices up more than sevenfold before the bubble ultimately burst in 1980.
The story began in 1974, when oil tycoon H.L. Hunt passed away, leaving his sons Herbert and Nelson Hunt with a vast inheritance. Seeking new opportunities, the brothers turned to commodities trading and chose silver, believing that rising inflation would propel the metal’s price significantly higher.
Using their substantial wealth, they accumulated massive amounts of both physical silver and silver futures contracts. Crucially, instead of settling futures contracts in cash, they demanded physical delivery. This aggressive buying pressure drove silver from roughly $7 per ounce to nearly $50 by 1979.
However, their initial fortune — estimated at around $1 billion — was not enough to fully control the market. To expand their positions, they began borrowing heavily. They also persuaded other wealthy investors, including prominent Saudi backers, to purchase silver as an inflation hedge. As more capital flowed in, regulators in the United States started closely monitoring their activities.
At one point, the Hunt brothers effectively controlled nearly two-thirds of the available silver supply.
Traders holding short positions began to panic as it became clear that there might not be enough silver available to meet delivery obligations — triggering what is known as a short squeeze. At the height of the frenzy, the Hunts’ combined wealth soared to approximately $4.5 billion.
Concerned about market manipulation and the integrity of national reserves, U.S. authorities intervened. The Commodity Exchange Inc. (COMEX) introduced “Silver Rule 7,” imposing strict limits on margin trading in silver contracts. As margin requirements were sharply increased, silver prices plummeted by more than 50% within just four days.
Unable to meet their financial commitments, the Hunt brothers faced mounting pressure. The situation escalated further when the Federal Reserve restricted speculative lending to prevent additional credit from supporting their positions.
The crisis culminated on March 27, 1980 — a day later known as Silver Thursday. On that date, the brothers failed to meet margin calls on one of their major loans. Forced liquidation followed, and silver collapsed from around $48.70 per ounce to roughly $11.
The fallout created widespread disruption across financial markets. Although a consortium of banks and corporations provided temporary support, it took nearly a decade for the Hunts to unwind their silver holdings and settle outstanding debts. In 1988, they were found liable in civil court for conspiring to corner the silver market, leading to bankruptcy — one of the largest such filings in Texas at the time.
The Hunt brothers’ saga remains one of the most striking examples of how leverage, speculation, and regulatory intervention can dramatically reshape commodity markets.
How to Buy Silver
WallStreetBets and a silver short squeeze
In the final weeks of January 2021, financial markets witnessed extraordinary volatility. A large online community on Reddit known as WallStreetBets began purchasing inexpensive, out-of-the-money call options on heavily shorted stocks. This coordinated buying activity triggered dramatic price surges in companies such as GameStop and AMC Entertainment.
As momentum accelerated, these stocks experienced powerful short squeezes, forcing short sellers to buy shares to cover their positions, which drove prices even higher.
The mechanics behind this move were rooted in options market dynamics. When traders buy call options expecting prices to rise, market makers typically sell those options and hedge their exposure by purchasing the underlying shares — a process known as delta hedging. As more call options are bought, market makers must acquire more shares to stay hedged. This additional buying pressure can push stock prices up further, increasing the delta of outstanding options and requiring even more hedging — creating a self-reinforcing upward cycle.
The reverse scenario can also unfold. When traders purchase put options, market makers sell those puts and hedge by selling shares. As prices decline, out-of-the-money put options gain delta, forcing market makers to sell additional shares. This can intensify downward pressure in what is often described as a gamma-driven feedback loop.
Following the explosive moves in meme stocks, attention briefly shifted toward silver. Participants on WallStreetBets explored the possibility of generating a similar squeeze in the physical silver market, attempting to replicate the momentum-driven surge seen in GameStop. To achieve such an outcome, investors would have needed to:
- buy iShares Silver Trust (SLV)
- buy other silver ETFs
- make an impact on the futures market
- force option market makers to keep buying SLV in order to maintain their delta hedge
Below we will take a look at what happened in the silver market after this, and whether it is possible for retail investors like WallStreetBets to short squeeze silver.
Interest booming
If you look at the options volume and call skew of silver, both reached new highs compared to the summer of 2020:
Another data from Bloomberg is volatility, which increased extremely:
This graph shows the daily inflow of silver shares, which was the largest in five years:
Another interesting development in silver was that its futures were in backwardation in February 2021, which is very rare in this market. This is a market condition where the price of a commodity’s forward or futures contract is trading below the expected spot price at contract maturity. This previously happened in:
- March 2020
- September 2015
- February 2011
After these periods of backwardation silver rose significantly.
All these figures indicate that interest in silver has grown significantly. Where is this money inflow coming from?
According to the latest Commitment of Traders report, a weekly publication that shows the aggregate holdings of different participants in the US futures market, over 80% of long positions were held by hedge funds, swap dealers, industrial users and producers.
High barrier to entry
In the case of commodity futures, the barrier to entry is much higher for retail traders like WallStreetBets:
- High initial and maintenance margins: $15,000 for standard silver futures, for physical delivery of 5,000 oz.
- Complexity of instruments and their high degree of leverage to the underlying commodity.
- Market access is more complicated: it cannot be traded on discount broker platforms like Robinhood, for example.
This means that you cannot simply open an account with a $1000 balance and start trading silver in the futures market. At least $100,000 is needed to trade exclusively in futures.
According to the Commodity Futures Trading Commission, the value of all open silver futures contracts on the Chicago Mercantile Exchange at the end of January 2021 was $21.4 billion, with 44% coming from hedge funds. This market is too big for retail investors like WallStreetBets to create the same kind of volatility as they did with GME.
On a global comparison, the market cap of silver is small. You can see the differences compared to other industries in the chart below (data based on early February 2021):
There are also huge differences between precious metals, as the gold mining industry for example is 20 times larger than that of silver mining. And even both of these combined are smaller than Tesla.
Target: mining firms?
So is there anything related to the silver industry that these Reddit players can possibly short squeeze at all?
One possibility is if they target silver mining companies with secondary listings on the NYSE or the NASDAQ. These stocks have seen their volatility increase in recent weeks, but compared to the stocks whose trading was restricted at Robinhood, the trading volume in silver mining stocks is very low.
The mining companies in question are:
- Pan American Silver (PAAS)
- Hecla Mining (HL)
- Mag Silver (MAG)
- Fortuna Silver (FSM)
- First Majestic Silver
Other than First Majestic Silver, institutional short positions in these stocks are below 5%. In comparison, it was more than 100% at GameStop prior to the short squeeze. That is a huge difference.
Thus, the lack of short interest means no silver short squeeze for WallStreetBets.
How to Buy Silver
Bottom line
As a precious and industrial metal, silver can also be used as an investment. It is one of the top 10 commodities, and there are several different forms for silver trading or investing:
- Silver ETFs
- Silver CFDs
- Silver options
- Silver futures
- Silver spot forex
A noticeable relationship exists between silver and gold, as the two metals often move in tandem. Historically, both have tended to perform strongly during periods of rising inflation, when investors seek assets perceived as stores of value. However, silver differs from gold in certain aspects, including how it may be taxed depending on jurisdiction.
Investor interest in silver has increased in recent years. Capital flows into silver-related equities reached their highest daily levels in five years, while activity in silver options markets climbed to levels not seen since the summer of 2020.
In February 2021, silver futures entered backwardation — an unusual condition in which near-term contracts trade above longer-dated ones. Historically, the previous three backwardation phases were followed by notable price gains in silver.
Industry data also indicated that more than 80% of long positions were held by hedge funds, swap dealers, industrial participants, and producers — suggesting strong institutional involvement in the market.
At the same time, short interest in silver remained relatively limited. Without substantial short positioning, the likelihood of a dramatic short squeeze similar to the one attempted by WallStreetBets was low.
As a result, the most significant speculative episode in silver’s history still remains the market-cornering attempt led by the Hunt brothers decades ago.