A Chinese investor may push the silver market into a "Short Squeeze".. Are we witnessing a repeat of the Nickel scenario?

The latest revelation at the Shanghai Stock Exchange about a massive short position by Chinese billionaire Bian Shiming has caused a huge stir in the market. The position is estimated at around 450 tons of silver, which is 30% more than the actual stock in the exchange, prompting regulators to intervene quickly to ensure market stability.

The market exerts pressure

With the position publicly frozen, it became clear that the market itself would pressure Shiming’s position. His short position amounts to 130% of the total silver stock, which could lead to significant buying pressure (Short Squeeze) similar to what happened with Volkswagen in 2008 and Nickel in 2022, where prices surged sharply due to efforts to cover positions.

What is a (Short Squeeze)?

A short squeeze occurs when an investor bets on a decline in price, but prices rise, forcing them to buy to cover their losses, which increases overall market buying pressure and drives prices higher.

Chinese intervention

Chinese authorities froze Shiming’s position to ensure market stability and send a clear message to other traders. The intervention limits the risk of a price collapse caused by large short positions and allows the bullish market to continue more balanced.

Lessons from the past

Volkswagen 2008: Rapid surge in stock price due to buying pressure

️ Nickel 2022: Significant price increase and temporary trading halt (Nickel buying pressure was caused by a massive short position by another Chinese billionaire, Xiang Guangda)

Potential impact on silver

If Shiming tries to cover his position in a market with only 350 tons, it could lead to additional buying pressure and a noticeable rise in prices.