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Skyrocketing silver price!


#1

I’m curious to know if anyone on this board has an informed opinion
for the reason for or cause behind the huge increase in the price of
silver over the last few months.

The easy answer would be that there has been an increase in the
demand for silver, but I find it unbelievable that world demand has
suddenly skyrocketed. Are investors and market speculators simply
buying more and thus pumping up the price (only to sell/dump them
eventually), or is there something else going on in the market that
I’m unaware of . . .

If any of you deal in large quantities of silver, I’m curious–are
you buying a lot now, anticipating further price increases, or
holding off buying more in anticipation of falling prices?

Doug


#2

The increase in silver prices is a real bummer. I don’t use large
amounts but do spend several hundreds each month or so on stock for
my classes. Of course, this means I will have to raise my material
fees to the students…many of whom can barely afford the price of
tuition let alone the fee. Unfortunately, I cannot wait for the
prices to come back down unless its for my personal use and I have a
nice stock already. So, the little guy will end up suffering.

Cheers from Don at The Charles Belle Studio in SOFL where simple
elegance IS fine jewelry. @coralnut2


#3

The price of just about every metal, base to precious, has been
increasing over the last 6 months. Silver has been increasing
because investors who are worried that gold has peaked are looking
for another metal that has room to increase in price. Industrial
metals like copper and steel as well as gold, palladium, and
especially platinum have all begun to hit levels not seen in 15 - 20
years…silver’s along for the ride, too.

European investors were the driving force initially because gold is
traded in dollars and the euro’s increased value in relation to the
dollar makes gold and other dollar traded goods a real bargain. Now
institutional investors; hedge funds, mutual funds, etc. are in the
drivers seat. There’s also the desire for an investment that can
act as a safe haven during the age of international mega-terrorism.
Watch gold shoot up every time there’s a major attack; the attack in
Spain was a good example. However, if the dollar, our economy or
interest rates perk up and international investors begin to see our
stock, bond market or other investment opportunities as more
lucrative than metals, you’ll see all the precious metals, except
maybe palladium and platinum which are driven more by industrial and
supply considerations, drop in price.

Larry


#4

As was stated metal prices have been increasing over the last year.
In the case of silver it is probably just currency exchange and
speculation since photographic use is falling.


#5
Are investors and market speculators simply buying more and thus
pumping up the price (only to sell/dump them eventually), or is
there something else going on in the market that I'm unaware of . .

Precious metals pricing tends to be more influenced by the
investment, commodities, and financial markets than by actual users.
Any uncertainties in the world will tend to drive cautious investors
away from standard investments into more secured ones, of which
precious metals is a often mainstay. With rising oil prices, and
political instability in the world (think of terrorism in spain and
risks thereof elsewhere, uncertainties about the future of
transitions in iraq, uncertainties about the november presidential
elections, various uncertain world trade issues, shaky confidence
in the stock markets themselves, worries about the rising federal
deficit and the economy itself, etc. ) All these serve to bring
precious metals prices up. Silver isn’t the only one. have you
looked at the price of gold and platinum lately? they’ve gone up as
much, or more, than silver. Makes it a great time to sell your
scrap, but painful to buy new metal.

Peter


#6

I’ve been gathering some numbers for an upcoming publication that we
will be sending to our alloy customers. I’ll share some of them with
Orchid (and others this is forwarded to) for perspective. Copper has
nearly doubled in the last year. The dollar is off but by about one
third against the Euro. One must consider the SA Rand as well. Zinc
and nickel are up, and so are most of the trace ingredients like
silicon, boron, indium, iridium, and you name it. Chinas rapid growth
is a huge factor.

BTW, while certain people are blaming the USA for polluting so much,
could those same people take a objective look at China and see who
really needs more industrial scrubbers on power plants, factories and
refineries, pretty please? (Sorry, I absorbed one harsh comment too
many from a European “Green” advocate)

In April 2003, gold was $325, silver was $4.50, platinum was $620,
and palladium was $170 all per Troy ounce. This year we find gold to
be $422 (a 29% increase), silver $8.16 (a 82% increase), platinum
$952(a 53% increase), and palladium to be $353(a whopping 107%
increase!) This amounts to an average “inflation” of 67% on the very
precious raw materials we depend on. Never mind gasoline, this makes
that look small potatoes. What this means to you as a jeweler is
quite impressive. If you bought alloy from us last year you may have
paid about $2.00 or maybe $2.50 This year the very same alloy will
cost $2.99 or more. If you bought 14kt casting gold was $10.34 now
the cost is $13.42 and that at a mere 8% above the actual spot and
metal content. Of course we refiners/suppliers adjust selling prices
accordingly, so this is fairly “revenue neutral” in terms of pure
profits.

The pressure is on all refiners and suppliers to somehow absorb the
difference or part of it. Which we cannot really do anyway!
Stuller, Rio, Hoover, Fell, feel free to chime in here!

Perhaps some of our “store owner” Orchidians can chime in on the
effect this has at the various retail price points. Platinum comes to
mind as the tough one to reach price points this side of five
figures.

I call this “The Jewelers Inflation Index” and the “zero” reference
point is April of 2003. It stands at 1.7.

Daniel Ballard
WWW.Pmwest.us