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Silver price forecast 1 February 2021

2021-02-01

2021-02-01

Silver will feed the wolves of Wall Street. Forecast as of 01.02.2021Dmitri Demidenko

The attack on silver market tests the strength of such a phenomenon as Reddit traders. If the crowd of small traders succeeds, all the professionals will have to reckon with them. What if it doesn’t? Let’s discuss the market outlook and make up a trading plan.

Weekly silver fundamental forecast

January from time to time brings real shocks to financial markets, which makes people forget about politics, the economy, and even about a pandemic. At the beginning of 2015, the Swiss National Bank decided to stop spending its gold and foreign exchange reserves to hold the [EURCHF][1] bears at level 1.2. After that, the pair collapsed sharply, and the franc became the Forex best performer of the year before its end. At the start of 2020, due to the flash crash, the yen strengthened sharply, rising within a few minutes against the Australian dollar by 8%. In January 2021, it’s time for Reddit newbie traders.

United in a crowd resembling a flock of animals, newbies brought hedge funds to their knees, pumping up GameStop prices by 1500%. After that, they began to be taken seriously. If earlier small traders had to look for large players’ traces to earn money, now it is enough to enter the forum. Following the shares of the video game maker, silver came into the focus of the Reddit flock. As a result, the [XAGUSD][2] prices soared to 5-month highs, and the stocks of the largest ETF iShares Silver Trust grew by a record $944 million overnight.

The flock has far more options than any particular wolf on Wall Street. Professionals cannot agree to collude; otherwise, they will face a prison sentence. They incur more serious brokerage costs than small traders. The flock has other problems. A split may occur in its ranks at any time. Opinion leader Ken Griffin’s calls to buy silver were initially met with enthusiasm, but then skeptics emerged. They noted that unlike GameStop, hedge funds had been net buyers of precious metals since mid-2019. Who are they going to fight against? Perhaps the flock leader, who has a lot of iShares Silver Trust shares in his portfolio, is merely pursuing his own goals of enrichment and will abandon the people following him at any moment?

Dynamics of hedge funds positions and other silver market

participants

Source: Bloomberg.

In the case of GameStop, ordinary traders outplayed Wall Street professionals. However, the large traders can benefit from the attack on the silver market. Can a crowd of individual traders influence the precious metal market? The capitalization of the precious metal market ($48 billion) significantly exceeds the value of the shares of the manufacturer of video games when the securities began to soar in mid- January ($1.4 billion). The flock runs the risk of breaking teeth.

Weekly silver trading plan

In any case, the silver scam is a test of the durability of such a phenomenon as Reddit traders. If newbies manage to boost [XAGUSD][2] prices, regulators will have to get down to business. The market is already ceasing to fulfill some of its functions. The last thing we need is to turn the market into a distorting mirror. Failure can discourage newbies from becoming professional traders. However, a precedent has been set, and other forums or social networks may follow Reddit. In the meantime, the inability of silver to break out the resistance at $ 30.15-30.3 per ounce serves as a signal of the flock’s mission’s failure and the basis for sales.

Price chart of XAGUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=EURCHF&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=XAGUSD&returnUrl=true