NEW YORK - The biggest rally in silver since 1979 is benefiting the commodities market's largest investors, including Bill Gates, the world's richest man.
The Microsoft chairman's Cascade Investment is the second-largest shareholder in Vancouver-based mining company Pan American Silver. His 3.32 million shares of Pan American are valued at about C$99.6 million ($139.9 million) and have tripled since 1999, when Gates made the investment.
A 55 per cent jump in the past 12 months has put silver on track for its best year since the billionaire Hunt brothers caused prices to skyrocket in 1979 by hoarding the metal.
Philip Klapwijk, executive chairman of London-based metals researcher GFMS, said silver, above US$10 ($16.42) an ounce for the first time in 22 years, might reach US$15 by year-end on rising demand from jewellery-makers and commodity investors.
Frank McGhee, head metals trader at Integrated Brokerage in Chicago, who forecast a high of as much as US$13, said: "Silver is a market that sort of acts like a freight train. It's really slow-moving but, once it gets started in a direction, you cannot stand in front of it."
Silver for May delivery rose as much as US10.5c, or 1 per cent, to US$10.89 an ounce on the Comex division of the New York Mercantile Exchange. It was trading around US$10.84 in London yesterday.
After a six-year rally, prices are up 22 per cent since December 31.
The metal also has attracted the billionaire Warren Buffett, whose Berkshire Hathaway bought 129.7 million ounces of silver in 1997, most it for less than US$6 an ounce.
Graham Birch, of London-based Merrill Lynch Investment Managers, the world's biggest investor in gold stocks, said silver "is a diversification tool". Investors were putting more money in commodities and, within that, there were some hotspots like silver.
Buffett's stockpile of silver would be valued at US$1.39 billion, about US$700 million more than from June 1997 to January 1998, when the investment was made.
Michael Kagan, of Legg Mason's CAM North America in New York, said rising demand might help silver outperform gold and copper this year.
Copper rose 37 per cent last year, touching a record this month, as demand from China depleted supply. Gold reached a 25-year high in February as investors bet against the US dollar.
McGhee said not even a drop in demand by filmmakers, the biggest users of silver, had hurt prices as investors sought a cheaper alternative than gold. Gold is up 32 per cent in the past year to US$560.50 an ounce.
The 1979-80 fiasco
* The gains in silver are the biggest since the Hunt brothers tried to corner the market in the 1970s.
* Nelson and William Hunt of Dallas sent prices to US$50 an ounce by early 1980 from US$6 at the start of 1979.
* The Hunts, who, along with their brother, Lamar, once had a net worth estimated at US$6 billion, were convicted in 1988 of conspiracy for trying to manipulate prices.
* They lost an estimated US$1.5 billion and were forced to pay US$130 million in fines.
- BLOOMBERG
Silver 'freight train' picks up more speed
Bill Gates
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