Silver surges to near 6-month peak on retail mania

GLOBAL MARKET - JAKARTA. Silver rallied for a third straight session on Monday, soaring as much as 7.4% to a near six-month peak, after social media posts since last week called for retail investors to flood into the market.

Spot silver hit its highest since Aug. 11 at $28.99 an ounce earlier in the session, and was up 5.3% to $28.44 by 0451 GMT.

Silver, both a safe-haven asset and an industrial metal, has risen nearly 15% since Thursday, when posts began circulating on Reddit urging individual investors to buy silver mining stocks and exchange-traded funds (ETF) backed by physical silver bars, in a GameStop-style short-squeeze.

"This is Asia's response" to all the retail mania, Brian Lan, managing director at GoldSilver Central said, adding that a lot of investors want to take advantage of the situation.

Demand for physical silver has more than doubled since Thursday, as investors who were on the sidelines bought the metal on worries that prices will shoot up, Lan said.

Data from iShares Silver Trust ETF on Friday showed over 37 million shares were created in one day, each one representing an ounce of silver.

Buying an ETF can boost silver prices by increasing the number of shares in the fund and making its operator buy more metal to back them.

There will be volatility in the short term, and prices could hit $33-$38, said Nicholas Frappell, global general manager at ABC Bullion.

But "once the storm calms, prices will come back to normal levels which is around $26-$27" and remain supported on strong fundamentals, said Jigar Trivedi, commodities analyst at Mumbai-based broker Anand Rathi Shares.

Following silver's gains, spot gold rose 0.8% to $1,860.76 per ounce. U.S. gold futures gained 0.7% to $1,863.40.

The gold/silver ratio fell to its lowest since 2014.

Platinum rose 2.4% at $1,098.08 and palladium gained 1.2% to $2,253.64.