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How much is U.S. giving to Asian disaster relief? Nothing, really
By Wendy Stueck
The Globe and Mail, Toronto
Saturday, January 8, 2005
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/2005010
8/RWATCHSILVER08/TPBusiness/Canadian
VANCOUVER -- It might be known as poor man's gold,
but silver outpaced its more expensive cousin last year
and analysts and producers say it has bright prospects
for 2005.
One of the biggest factors behind that optimistic view is
China, which has been selling excess silver -- amassed
during decades when the only buyer for the country's
mined silver output was the People's Bank of China --
on the open market, unloading millions of ounces a year
each year since 1999.
But the amount sold each year has been gradually
declining and there is now speculation that the Chinese
stockpile may be gone.
"In the last five years, we reckon China has sold close
to 300 million ounces of silver on the world market,"
says Ross Beaty, chairman of Vancouver-based Pan
American Silver Corp. "The absolute amount of that
stockpile is not known. But we know it is seriously
depleted and we think it may be completely depleted."
The buzz around silver has been building for at least
the past 12 months. Silver futures contracts took off
early in the year, soaring to 17-year highs of more
than $8 a pound in April on the Comex division of the
New York Mercantile Exchange. Prices subsequently
dropped, ending the year at $6.81, still substantially
above the $5 mark where the metal has treaded water
for most of the previous five years.
Silver closed yesterday at $6.43 on the Comex
exchange.
In terms of price appreciation, silver outperformed gold
last year, rising 13.6 percent in U.S. dollar terms,
compared with 4 percent for gold, based on closing
prices in London.
Over a five-year period, from 1999 to 2004, silver rose
27 percent and gold 50 percent.
Silver's biggest role is not as an investment but in the
industrial, jewellery, and silverware, and photographic
sectors, which account respectively for about 40, 30,
and 20 percent of annual demand.
The photography sector, which accounted for 22
percent of silver demand in 2003, is shifting to digital
technology, which has reduced demand for silver.
But that drop, about 4.7 per cent in 2003, according to
London-based consulting firm GFMS, has not been as
dramatic as some had expected. And as the usage of
silver in the film sector declines, it's picking up in the
printing sector, as consumers seek out high-quality
prints for their digital pictures.
Silver is also being used in a growing number of
applications, such as anti-bacterial medical dressings.
An improving outlook for silver has companies gearing
up for exploration, especially in Mexico, the world's
biggest silver producer.
Vancouver-based First Majestic Resource Corp. has
been snapping up silver projects in Mexico, and began
producing the metal at its La Parilla mine in July.
Western Silver Corp., also based in Vancouver,
announced Dec. 23 that it had wrapped up a C$64.8
million financing to help develop its Penasquito project
in Mexico.
There are relatively few pure silver plays and the
handful that exist tend to trade at even loftier premiums
than gold producers. The group includes Pan American,
Idaho-based Coeur d'Alene Mines Corp., and Apex
Silver Mines Ltd. of Denver.
Vancouver-based gold producer Wheaton River Minerals
Ltd. last year announced plans to spin off its silver
production into a separate company, a move that will
create another pure silver play.
Silver Standard Resources Inc., also based in Vancouver,
does not currently mine silver but has built up a portfolio
of silver projects with an eye to profiting from the metal's
future price increases.
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Ted Butler silver commentary archive:
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