Silver’s Reddit-Fueled Surge Pains Dealers in Dubai’s Souks

(Bloomberg) -- The disruption caused by silver's Reddit-fueled surge has spread all the way to the souks of the Middle East.

While the metal's jump to an eight-year high on Monday benefited many long-standing bulls on Wall Street, shop owners thousands of miles away in Dubai's Gold Souk were far less euphoric.

Traders in the market -- who sell plenty of silver, diamonds and platinum in addition to gold -- have to pay more to source their silver jewelry and bars from wholesale dealers. That's forced them to mark up their own prices, and it's scaring customers away.

Business was already slow after the Covid-19 pandemic cut the number of tourists packing into the bazaar, one of the biggest traditional metals markets in the Middle East. Then came the Reddit crowd pushing up silver.

“This is getting too crazy,” said Shuhaid, a trader in the souk, who didn't provide his last name for fear of retribution from his employer or the government. “Customers are asking for the price and then canceling their orders. It's getting really terrible.”

Interviews with more than 20 silver salesmen in the market, many of them immigrants from India, Pakistan and Afghanistan, painted an equally grim picture.

Most said they're simply wishing the speculative craze ends soon. They got a partial reprieve on Tuesday, with silver dropping around 5% to below $28 an ounce after analysts warned the rally was overdone.

©2021 Bloomberg L.P.