After GameStop, what will Reddit investors do to the price of silver?

Activist investors targeting silver may be a storm in a teacup, our columnist says.

Silver

The share price of GameStop (NYSE:GME) has accelerated ludicrously this past few weeks, performing in the traditions of a ramped UK AIM share. We've a bit of a suspicion this story shall end with the share price down below $10 (£7.30).

It closed Monday at $186, down 42% on the day. The social media site Reddit was credited with providing the platform to drive private investors into a frenzy, with some impressive projections suggesting the price was going to at least $1,000.

Various sections of the media then picked up on someone suggesting a similar tactic could be enacted with the price of silver.

Fairly soon thereafter, it became 'a thing' that private investors on Reddit were intending to aggressively buy silver, forcing the price up.

Confusingly, while some Reddit posts do suggest this, other users of the website say it has nothing to do with them.

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Regardless, quite a few of the silver miners have share prices doing very nicely, doubtless catching the positive sentiment. The price of silver accelerated from $16 last June to a high of $30 in August, then had six months of relative price stability as the commodity successfully remained above the $22 mark.

For silver this is a really big deal, as the product has a pretty firm track record of giving then taking it all away again.

In the event that silver makes another upward twitch, above the $30 mark is liable to be interesting, calculating with an initial ambition at $32.50. Secondary, if exceeded, would come in at $38.50. This behaviour is almost certain to reflect positively on the likes of mining stocks Fresnillo (LSE:FRES) or Hecla Mining (NYSE:HL), to name just two.

If it all intends to melt away for silver, below the $22 mark would certainly be the first sign of concern, threatening reversals to an initial $18 with secondary, when broken, back around the $12 dollar level, suggesting the last six months were but a dream.

Visually, we suspect silver may finally be performing properly and if this is the case we'd hope any reversal would arrest at the $18 level.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of interactive investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.