Canadian silver mining companies give up Monday's gains as apparent squeeze fails

·2 min read

CALGARY — Canadian silver mining companies are giving back double-digit share price increases gained Monday as an apparent drive by online retail investors to boost interest in the shiny metal grinds to a halt.

In late-afternoon trading on the Toronto Stock Exchange, First Majestic Silver Corp. was down about 23 per cent, mirroring its gain on Monday, while Silvercorp Metals Inc. was down about 17 per cent, offsetting its Monday gain of 25.7 per cent.

In a research note titled "The silver squeeze is dead," TD Securities commodity strategist Daniel Ghali says the attempted manipulation of silver appears to be over, with Google searches trending lower, defeated by elements including the ample liquidity of the silver market.

He adds that fundamental forces should eventually support silver prices above US$30 an ounce, the eight-year high the metal briefly touched on Monday, but it won't be due to the squeeze.

The March contract for silver settled at US$26.40 per ounce on Tuesday afternoon, down US$3.02.

Vancouver-based Endeavour Silver Corp., whose shares rose almost 21 per cent on Monday, was down more than 17 per cent on Tuesday.

"Well that was quick," said Endeavour CEO Brad Cooke in an email.

"That was no silver squeeze, it was a classic pump and dump, the Wallstreetbets (Reddit page) ring leaders appear to have suckered the Reddit retail investors on this one."

The jump in silver's fortunes on Monday followed intense interest over the weekend over whether it would become the next active market after Reddit traders banded together last week to snap up stocks like GameStop that have been heavily shorted (bets that the stock will fall) by a number of hedge funds.

But the rush into silver futures created confusion, with some retail traders on Reddit accusing the hedge funds that were pillaged last week of joining Reddit anonymously to drive them out of GameStop bets and into silver.

This report by The Canadian Press was first published Feb. 2, 2021.

Companies in this story: (TSX:EDR, TSX:FR, TSX:SVM)

The Canadian Press