Speculators polish up the price of silver
“Almost anything is better than paper money ... any fool can run a printing press.”
These are not the words of a modern-day gold bug, but attributed to Nelson Bunker Hunt, the billionaire oil baron who went long on silver in the 1970s. So long, in fact, that he and his brother cornered the market, were sanctioned by the regulator for market manipulation and went bankrupt in the process.
After their move, the price of silver hit a peak of $50 an ounce in 1980 before dropping to $10 the following year.
In the past month silver has bounced back to prices not seen since the Hunt brothers’ day. No single investor is cornering the market but, just as in the 1970s, the price is being driven by surging speculative demand as investors sweep up supplies of the grey precious metal whose primary use is industrial.
Investors in silver, also known as “poor man’s gold”, are persuaded by many of the same arguments that have driven the gold price higher: the prospect of a global “currency war” in which central banks race to devalue their currencies to support domestic growth and the belief that a second round of emergency monetary easing by the Federal Reserve could eventually lead to a sharp jump in inflation.
Gold has captured the headlines, ticking off one new record high after another, but volatility in bullion is near a five-year low, which for some investors makes it a less exciting prospect. Returns on silver, they say, could be greater.
ft.com |
