Silver’s streak

SILVER is glittering more brightly than gold for many investors, even though its price lags far behind that of the more glamorous metal.

Gold, though, has lost none of its lustre, rallying yesterday to a record high of US$1,461.20 after rising 3 per cent since the start of the year.

But the shinier metal in terms of recent percentage gains is undoubtedly silver, which broke a 31-year-old record by reaching US$39.52 an ounce yesterday.

Its price has outpaced gold’s by a mile, doubling since last year and rising 30 per cent since January this year.

Analysts said investors have been buying up the two metals as a hedge against uncertainty in the Arab world, rising inflation and sliding major currency values.

‘It is unquestionable that the demand for these precious metals derives from the devaluation of the leading currencies, the dollar, the pound and the euro,’ Mr Angelos Damaskos, a fund manager at Sector Investment Managers, told Reuters. ‘Investors are looking for an alternative store of value, and one of those is the precious metals.’

Yesterday, the yen fell to a six-month low against the US dollar, trading at 85.12 yen. The greenback also slid to US$1.43 against the euro, a 14-month low.

Aside from silver being a store of value, its rise is also driven by the fact that it is a highly sought-after industrial metal used in electronics manufacturing such as computer chip production, said Ms Ong Yi Ling, an analyst at Phillip Futures.

Silver’s previous record high of US$50 an ounce in 1980 came after billionaire brothers had tried to corner the market by buying massive amounts of silver.

The Hunt brothers had, at one point in time, owned more than 200 million ounces of silver.

They failed and the price of silver fell dramatically, and has picked up only in recent years. It was trading at about US$18 an ounce early last year.

‘Silver is a unique asset that has a store of value and industrial properties,’ said Ms Ong.

‘With the economic recovery gaining some momentum, silver has outperformed gold tremendously.’

Businesses here say they have been affected by the high price of gold.

Goldsmiths are reporting lower sale volumes while pawnshops are seeing more people cash in their gold jewellery.

Mr Nelson Liew, operations manager at Best Jewellery & Goldsmiths, said sales of gold items have been falling over the past 18 months.

However, Mr Yeow Shang Ying, manager at Heng Leong Pawnshop, said he has seen more people come to pawn gold in the past six months or so.

To cope with the high price of gold, some jewellery stores such as Taka Jewellery are offering promotions and discounts to attract customers, said Ms Madeline Tay, its marketing manager.

Silver’s recent spectacular gains have prompted many investors to turn their attention to this metal.

Mr Joshua Thia, who runs a business importing silver coins and bars and selling them to individual investors, said his business doubled last year as individuals saw the huge potential in silver prices.

‘I have customers from teachers to millionaires, and they all wanted to buy silver for the huge potential in value,’ said the 26-year-old entrepreneur, who makes between $3,000 and $12,000 a month.

His best-selling item is a box of 500 silver coins, which costs about $31,000, at current silver prices.

‘I won’t be surprised if silver doubles in value in the next few years as people start to realise how valuable it really is,’ he added.

One such investor is engineer Tay Cheok Sin, 36. He owns a few silver coins, handed down to him by his grandmother, and wants to buy more.

‘I’d rather put my money in physical things than buy numbers on a screen because I want to feel my investment with my fingers,’ he said.

‘And I’ve always liked white better than yellow.’

Source: Straits Times (subscribers only)

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