Goldman Sachs sees silver price climb to $ 33 an ounce, Reddit squeeze was doomed


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(Kitco News) – Volatility continues to dominate silver prices as the market continues to face the fallout from a short squeeze that fizzled out after a host of retail investors launched into the precious metal.

Silver prices rebound small on Wednesday after the markets significant drop on Tuesday. The market is still significantly down from Mondays peaks of almost eight years. March silver futures last traded at $ 27.10 an ounce, up 2.64% on the day.

Looking at recent price volatility, Goldman Sachs analysts, in a research report released Tuesday, reiterated their bullish forecast for silver.

The bank sees prices soar to $ 33 an ounce as US President Joe Biden forges ahead with a plan to increase production of alternative renewable energy.

While many retail investors – organized via social media and a Reddit post from Wall Street Bets – hoped to create a short money contraction, similar to what they achieved in stocks like Gamestop, Blackberry, and AMC Goldman Sachs said the plan was doomed to fail.

“While some shorts are speculative and require hedging before expiration, most are motivated by industrial producers hedging their profits forward,” the analysts said in their note. “When short positions in commodities are largely supported by real physical stocks, there will be no subsequent buy or short squeeze.”

In an interview with Bloomberg News, Jeffrey Currie, global head of commodities at the investment bank, said the silver market is worth around $ 200 billion a year; it is simply too big to be handled by retail investors.

“To corner the market and create a short squeeze, we estimate that each individual at Wall Street Bet would need to accumulate positions of around 4,200 ounces,” he said. “It’s a lot of money, and where are you going to put it.

The bank also noted that after the Hunt brothers sadly attempted to control the entire silver market in the 1980s, regulations came along that now make it nearly impossible to corner the market.

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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