Commodities: Shine on Silver

At quarter past noon every working day, half a dozen agents from London's three big bullion dealers meet in the teak-paneled board room of Sharps, Pixley & Co., for a gentlemanly haggle that sets the price of silver in Britain—and much of the rest of the world. Last week every one of the agents was saying the same: "I'm a buyer—not a seller." With that, the price of silver hit a 42-year record of $1.14 per oz. in London, also advanced to $1.13 in New York City, which is the world's other major market.

Behind silver's spectacular rise lay two major causes. Demand for silver now exceeds new supply largely because of the rapid expansion of industrial uses for the metal in electronics, aerospace and photography (for film emulsions). Last year the free world consumed 351 million oz., but new production was only 211 million oz. On top of this, the U.S. Government last fall stopped its longtime practice of selling silver from its stockpile at 91¢ per oz. Back in 1946, the U.S. had set the price at 91¢ to support silver, but the heavy demand of recent years had turned the floor into a ceiling, and so the U.S. scrapped it.

Where prices go next depends largely upon Mexico, which last year produced one-fifth of the free world's new supply of silver and is also a big hoarder of the metal. Last week the Mexicans, acting to hold the price at $1.13, were cautiously selling from their reserves. They were fearful that if the price went much higher, Red China might start dumping its reputedly large hoard and thereby crack the market.