Silver fund inflows surge in January on retail trading frenzy

Silver ETFs and mutual funds saw their biggest inflows in five months in January, according to Refinitiv Lipper data, as retail traders rushed to buy the metal in a bid to emulate last week‘s surge in bets on video game retailer GameStop.

An analysis of 28 global silver ETFs and mutual funds data available on Lipper showed they received an inflow of $1.8 billion in January, their biggest since August 2020.

iShares Silver Trust ETF, the largest silver-backed ETF, recorded an inflow of $1.2 billion in January, out of which $780 million came in the last week, the data showed.

Aberdeen Standard Physical Silver Shares ETF and ZKB Silver ETF had inflows of $80 million and $13.7 million respectively in the last month.

Spot silver surged over 6% last week and added another 9% on Monday as thousands of Reddit posts suggested that higher silver prices could hurt banks with large positions, and said buying easy-to-access exchange-traded silver funds could quickly ramp up the metal’s value.

Shares of videogame retailer GameStop have rallied about 1,500% in the past two weeks as small investors ramped up their investments in companies which big fund managers had bet against.

GameStop was one of the most heavily shorted stocks in the United States, according to data.

“It remains to be seen whether Reddit traders will have the same success in triggering a massive short squeeze for silver as they did for downtrodden stocks such as GameStop,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

“Unlike single stocks, the market for silver is much larger and more complex and therefore more difficult to manipulate.”

Silver ETFs and mutual funds saw an inflow of $3.8 billion in 2020 as the COVID-19 pandemic increased demand for safe-haven assets.

Silver’s industrial use also helped to sustain the rally in the later part of the year, when recovery hopes rose on vaccine optimism.

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