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What is a Short Squeeze? And is it the real reason behind the rise of silver?

Have you ever heard of a stock or commodity whose price skyrocketed very quickly and without a clear reason? Like what happened with silver? The most common cause is what is known as a Short Squeeze or "The Squeeze."

What is a Short Squeeze?

It occurs when traders who bet on falling prices (short sellers) are forced to close their positions quickly by buying back, after the price moves against their expectations, leading to a sharp and rapid increase in the price.

How does it happen?

1. Short Selling

*Investors expect the price of a certain stock to fall.

*They perform a process called "Shorting" (short selling).

*They borrow the stock and sell it immediately (for example, at $10).

*Their plan: buy it back later at a lower price (for example, $5) to profit from the price difference.

2. The Surprise (The Opposite Scenario)

Instead of the price falling, an unexpected event occurs (positive news or a buying frenzy from other investors), and the price begins to rise (to, say, $15).

3. The Squeeze (The Squeeze)

Here, short sellers are caught in a dilemma, as they are forced to buy back the shares to return them to the lenders they borrowed from, and the longer they delay, the greater their losses.

4. The Price Explosion

*Panic ensues, and these investors rush to buy the stock at any price "to cover their positions" and minimize losses.

*This sudden and large demand adds to the natural market demand.

*And the result? A very sharp, rapid, and upward price explosion.

Does this happen with silver?