VIDEO - James Anderson: Unpacking the Silver Squeeze - Supply, Demand, What’s Next

Silver has surged into the spotlight over the last two weeks or so, propelled briefly to the US$30 per ounce level after it appeared to draw attention from Reddit’s WallStreetBets forum.  

While WallStreetBets members have since distanced themselves from silver, saying the media has falsely represented their interest in the white metal, silver has remained in the spotlight.

A flood into physical silver has been one result of the situation, said James Anderson of SD Bullion. Putting recent demand levels into context, he said that over the January 30 to 31 weekend, sales at bullion dealerships were 10 to 25 times the typical weekend volume depending on the location.

“It’s real — it’s absolutely real,” he told the Investing News Network. “You obviously can go around and see how all these websites don’t have any inventory left.”

From what Anderson has seen, the majority of physical silver purchases are coming from regular buyers, but new entrants are making a mark as well.

“A lot of them are regular buyers who are coming in and buying because they’re concerned. They see the chance the spot price might get away from them, so they’re I think trying to scramble for as cheap a price (for) silver as they can get,” he said. “I think a lot of them think US$50 silver is possible this year.”

Aside from physical silver, investors have gravitated toward exchange-traded funds (ETFs), with the iShares Silver Trust (ARCA:SLV) and the Sprott Physical Silver Trust (ARCA:PSLV) rising to the fore. Anderson took the time to explain the difference between them, noting that he favors PSLV and would only consider SLV for short- to medium-term day trading.

In terms of what could be next for the silver squeeze saga, Anderson said he thinks more truth and understanding will ultimately come out of what is now a complex situation. “There are people who are buying it on a retail level, but what I suggest is that it’s moving up the chain — I think it’s moving up the complex of the entire precious metals industry,” he said.

“Not just simply people who are going long in miners or in ETFs, but I think eventually you’re going to see derivatives on the COMEX — you’re going to see longs coming in and slamming those folks that are on the short side, and a lot of the times the folks on the short side are commercial banks who are allegedly naked short on the metal. That I believe is where this ultimately leads.”

Watch the interview above for more from Anderson on silver.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.