Silver’s record run is being driven by solar power

SILVER’s booms and busts are typically turbocharged by excitable investors. Sober industrialists bear their share of responsibility, though.

- By David Fickling

It’s worth reflecting on that fact, given the 67% run-up in spot prices so far this year. The precious metal’s current surge to a record $54.24 a troy ounce last week looks to be weakening as speculative enthusiasm subsides: It fell 7.1% on Tuesday. But anyone hoping fora return to levels below $30, which looked like a price ceiling until about 12 months ago, may be in fora long wait.

That’s because silver is an industrial metal in all but name. Coin and bullion investors consume barely a fifth of annual production, with jewelry and cutlery adding another fifth. The remainder goes into factories, where it has an array of uses.

Many of silver’s most notorious price spikes have been driven by this industrial demand. In 1979, three Texan oilmen managed to corner the market, driving up prices 62% between Christmas Eveand thefirst trading day of 1980 before a margin call sparked a wider financial panic. (That incident was the inspiration for the classic festive commodities comedy, Trading Places.)