Silver has been in the news the last couple of days as the commodity has been targeted by the retail traders from Reddit’s group. Yes, the same group that are responsible for the infamous Gamestop surge. These traders have been buying the commodity and causing an imbalance in supply and demand forces that dictate the price for the precious metal. A lot of buying pressure has been forced upon silver and hence, the price of silver and silver stocks have skyrocketed.
Thomson Resources (ASX: TMZ) and Silver Mines Limited (ASX: SVL) were one of the biggest gainers in light of these events. At different points on the trading day, these stocks had gained as much as 50% and 80%, respectively. TMZ and SVL are penny stocks that have very less assets compared to the heavyweights. This makes them especially sensitive to the price of silver as valuations can change much more drastically. In addition to these, there were other ASX silver stocks that gained from yesterday’s rally.
This morning however, silver prices started plunging. At the time of writing, silver prices are down over 5% at US$27.46 an ounce. Thomson Resources and Silver Mines made the headlines for losses – both posting around 26% losses for the trading day.
While silver has a lot of inflationary properties and is a safe-haven, extreme caution should be advised when trading silver stocks at this moment in time given the catalyst for the surge in silver and silver stocks has been retail investors from the same reddit group that have caused quite a stir in the US stock markets.
Growth stocks are potentially one of the hardest to pick as there are a lot of factors that need to be considered – from industry tailwinds to financial health of the individual stocks, and a lot of little things in between them. Shares in Value research team have picked their top 3 ASX stocks to buy in 2021. Click here to download the report for free.