Groundhog,
Apparently it is not so....Friday December 4, 2:58 pm Eastern Time
Silver seen slumping on weak demand, not Buffett
NEW YORK, Dec 4 (Reuters) - Silver prices fell to their lowest levels in 15 months
this week, driven by weak demand for industrial commodities, rather than by
selling by U.S. billionaire Warren Buffett, as published reports speculated, U.S.
traders said.
In February this year Buffett's company, Berkshire Hathaway (NYSE:BRKa - news), disclosed it had bought
129.7 million ounces of silver, which analysts said was equivalent to about 20 pct of annual world silver mine
output.
''I'm very skeptical about the theory that this week's sell off was driven by Warren Buffett,'' said Scott
Mehlman, chief bullion dealer at Credit Lyonnais Rouse in New York.
''There's been no unusual bullion market activity as there was when Buffett accumulated his holding last year,
and there's been nothing untoward in the way silver lease rates have been behaving either,'' he said.
''However, some hedge fund activity was noted and COMEX open interest in silver jumped,'' he said.
Open interest in COMEX silver futures, or the number of outstanding contracts held, jumped 5,557 lots
Thursday to 80,321 contracts, equivalent to 401,605,000 ounces, the highest level in three months.
In February this year, Buffett said Berkshire Hathaway had accumulated its silver position between July 25,
1997, and Jan 12, 1998.
Between those two dates the spot price of silver rose from $4.25 to $6.39 an ounce, meaning silver prices are
now probably below the average price at which Buffett bought his silver.
''All we know is that in Berkshire Hathaway's latest quarterly statement there was no mention of the silver
holding, which amounts to about two percent of the company's assets,'' said Joe Rosta, research director at
industry consultants CPM Group in New York. ''The regulations require that any material change in holdings be
disclosed, so we presume Buffett has not sold any.''
Officials at Berkshire Hathaway would only say Friday that ''the company never comments on its investment
activities''.
Demand for silver has outstripped mine supply for the past nine years, drawing down bullion inventories
around the world, according to CPM Group.
COMEX warehouse silver inventories slid to a record low earlier this year as a result and stood at 78,561,418
ounces Thursday.
But the demand for metals for industrial uses has been easing as the impact of last year's Asian economic crisis
slowed world economic growth.
''Silver prices were caught in the wake of the sell-off in base metals prices in general, as the outlook for
demand for industrial commodities is bleak,'' said Dinsa Mehta, managing director for global commodities for
Chase Manhattan Bank in New York.
Copper prices slid to new eleven year lows this week, while aluminum prices fell to four year lows, reflecting the
weakness of industrial demand, analysts noted.
COMEX March silver was up 1.5 cents at $4.810 an ounce midday Friday, after the contract fell to a
life-of-contract low at $4.585 an ounce Thursday.
In the bullion market, spot silver was quoted $4.79/82 an ounce, compared to the London Friday fix at
$478.25, and the New York Thursday at $4.78/81.
''I suspect we've seen the lows for now in silver,'' said Frederic Bogart, chief precious metals trader at Republic
National Bank in New York.
''I doubt the silver sell-off was driven by Buffett selling, it's just been a terrible year for metals overall and
commodities in general,'' he said.
More Quotes and News:
Berkshire Hathaway Inc (NYSE:BRKa - news)
Related News Categories: US Market News
Dan |
