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Hi ho, silver Posted: Tue, 14 Mar 2006 [miningmx.com] -- SOUTH African investors aren’t accustomed to reading much about silver, mainly as there’s very little of it produced in Africa. What output that does come from Africa is only a by-product of other metals, some of which are in South Africa. In fact, of the 31 listed silver producers worldwide, 24 operate in the Americas, with 14 in Mexico alone. So why should we care that there’s a High Noon moment forming in the wild west of silver? Well, the introduction of two new silver-related exchange-traded funds (ETFs) is one signal that interest in commodities is now extending to its more exotic reaches – an indication, perhaps, of the market's maturity. It also indicates how partial investors have become to buying the actual metal (the gold ETFs are backed by physical metal). In fact, we may see more ETFs and in products other than gold and silver. The silver ETFs – one supported by Barclays Global Investors in the US and the other in Britain – have an opponent in the form of the Silver Users’ Association, which claims that the infamously illiquid silver market will be damagingly skewed by their products. Warren Buffett was the last to dabble in silver in 1998 on the same scale envisaged by the ETFs, according to a report by the Financial Times. The silver price shot up about a third to US$7/oz in February of that year after Buffett picked up about 120 million oz of the metal. Were the silver ETF to become as popular as gold ETFs, 125 million oz of additional demand would be created. That’s because funds invested in ETFs are used to buy the metal and keep demand high. In the small world of silver – its price is much less volatile than gold’s – that’s heady stuff. Silver was in balance during 2004, with total demand at 870 million ounces.Free news alerts: click here to subscribe
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