At 27-Year Highs, Silver Outshines Gold

March 3, 2008; Page C3

Silver, often dubbed the poor man's gold, is polishing up its act and outperforming the high-priced yellow metal.
The metal is getting a chic look at 27-year highs as investors move money out of gold and into the gray metal. They want to profit from the bull market in commodities but consider gold to be too expensive. Washington's efforts to stimulate the U.S. economy are seen boding well for industrial demand for silver in electronics, medical equipment and other products.

The metal's hybrid role of financial asset and industrial use is helping to give it an edge with some investors over gold. Although gold prices are making headlines with record prices, the front-month futures contract on the Comex division of the New York Mercantile Exchange has risen only 16%, or about half that of silver's surge.

Nearby March and most-active May silver settled about 1% higher on the Comex division of the New York Mercantile Exchange on Friday. March settled at $19.808 an ounce, up 17.8 cents, off the high of $19.925, the highest front-month price since November 1980, reached overnight. The May contract peaked at a contract high $20.055 in electronic trade overnight and settled up 20.5 cents at $19.915.

Meanwhile, nearby March and most-active April gold settled about 0.8% higher. The March contract rose $7.60 to $972.10 an ounce, the yellow-metal's highest-ever front-month price. April gold settled up $7.50 to $975.

"Silver has performed even better than gold over the last couple months or so," said Patrick Fearon, precious-metals analyst with A.G. Edwards. "Silver has escaped some of the threats that are hanging over gold."

He cited potential gold sales by the International Monetary Fund. In a reversal of policy, the U.S. Treasury Department indicated support of such a move last week.

Like gold, silver is seen as an alternative currency to the sinking dollar and an alternative asset against uncertain stock-market performance, said Tom O'Brien, analyst and editor of "The Gold Report."
One risk for investors is that the market for silver is less liquid than that for gold. That can mean bigger moves up -- and down, said Jim Steel, a senior vice president and metals analyst at HSBC.

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