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SCMP Reporter

Silver prices soared to their highest level in almost 10 years yesterday after revelations highly respected United States investor Warren Buffett had cornered about 20 per cent of the world's estimated silver supply.

 Reports also emerged that US financier George Soros had built up a key exposure to silver through his Quantum Industrial Fund and Silver Holdings.

 Mr Buffett - whose company Berkshire Hathaway has been conducting his purchases in the silver market for more than six months - is believed to be sitting on a multi-million dollar profit, having bought into the commodity at almost its lowest price last year.

 Mr Soros' exposure is principally through a 28 per cent holding in Apex LDC, a firm that owns 100 per cent of the San Christobal silver project in Bolivia.

 Yesterday analysts praised Mr Buffett's buying strategy, noting that silver reached its floor last year on 23 July and Mr Buffett began buying two days later, with his final purchase made on 12 January.

 'He is sitting on a fabulous profit there . . . the timing was faultless,' said Tony Warwick-Ching, analyst at Flemings.

 He said demand for silver was expected to continue outstripping supply.

 Mr Buffett said he had no plans to increase or decrease his holdings.

 Yesterday silver rocketed to a fix of US$7.05 per ounce, its highest level since July 1988, crowning a week when one-month lease rates have shot to 20 per cent and the backwardation - where spot prices are higher than prices quoted for future delivery - widened to about 5 per cent of the forwards.

 Berkshire said it had amassed 129.7 million ounces of silver, worth about $850 million, entirely through the London silver market and through one brokerage firm.

 The disclosure sent a flurry of copycat buyers into the market, and analysts recalled the famous 'Bunker Hunt' episode in 1979-80 when the price soared to $50 per ounce following an intense squeeze on the market.

 Yesterday dealers questioned how Berkshire managed to buy such vast quantities of silver without making an announcement earlier.

 The Bank of England, which is responsible for regulating the main silver market participants, said it was monitoring the market, but would not comment on whether it planned to hold an emergency meeting with the main industry body, the London Bullion Market Association.

 The association's chief executive Chris Elston said he hoped to make a statement soon, but said it was an industry body and this event constituted market activity.

 It is thought the central bank may ask the association to publish individual silver holdings, as only monthly clearing turnover is now released.



Silver shines as Buffett polishes off 20pc of supply