Thefts down, consumer buying up, as silver prices drop
Dramatically lower silver prices have tarnished the desire of burglars for silverware and are bringing back consumers to buy place settings. At the same time, the US government may help push prices down further by selling most of the country's strategic stockpiles of silver.
A year and a half ago, silver prices escalated to $50 an ounce, and the number of robberies involving silver took a corresponding jump. Today, silver sells for about $10 an ounce, and robberies are down, as well.
"When place settings go from $117 to $240, robbers will take silver," said Lt. Charles Feeley of the Newton, Mass., Police Department." "When silver was at its highest price, there was a definite correlation to the number of robberies. But now with lower prices, there has been a tremendous decrease in the amount of silver-related robberies."
Lower silver prices should also encourage people to buy silver again, according to Richard Gillespie, vice-president of marketing for Reed & Barton Silversmiths of Taunton, Mass.
"Because demand for silver fluctuates with the direction of the price, we were seeing a period of postponement in buying silver during the first half of the year," Mr. Gillespie said. "But the demand for sterling silver will be strong again."
The price of a four-piece place setting, which includes two forks, a knife, and a teaspoon, has had its ups and downs. In January 1979 the price was $115, he said. By February 1980 th price had reached $496 for the same setting. Currently the setting sells for $267.
Prices for silver settings depend on the cost of the raw material, Mr. Gillespie said. He expects that Reed & Barton will reduce its current prices by roughly 10 percent.
The US government could also help lower the price if the budget proposal passes.It includes a provision to sell silver from the national stockpile of strategic materials, which has 139.5 million ounces of silver valued at $1.4 billion. The House of Representatives has established a three-year plan to sell about 105 million ounces, starting with 46.5 million ounces the first year, but the Senate has yet to decide what its figure will be.
Silver's importance in the stockpile results from its use in defense areas, like electronics and photography, particularly reconnaissance aircraft.
Any action to sell from the stockpile would lower the price, says Algis-Utenis, a commodities broker with Merrill Lynch, Pierce, Fenner & Smith Inc.
"The action would depress the price temporarily," he said. "Psychologically it would have a dampening effect, because that is a considerable amount for the public to have to consume."
A staff member with the House Armed Services Committee said the decision to sell part of the stockpile was "the only thing we [the committee] could do to reduce the size of the federal budget."
The decision has evoked responses on both sides of the budget battlefield.
"Silver seems to be an emotional and political issue," said W. L. Frankland, executive vice-president of the Silver Users Association, a group of manufacturers. "Silver cannot be treated like a regular commodity, when in fact it is an industrial commodity that is too closely linked with money.
"Authorizing the sale of 46.5 million ounces is a step in the right direction. Our position is to get the government out of the silver business. It's hard to classify silver as 'strategic,' because we produce enough. If you really need it, it's there."
But not everyone agrees that silver will always be there.Simon Strauss, chairman of the minerals availability committee of the American Mining Congress, said the country may not always be able to depend on big silver producers during wartime. The US is the largest consumer of silver and produces only about 40 percent of what it uses.
"I don't agree that we can always get all we need from Canada and Mexico," Mr. Strauss said. "If the United States is involved in a big war, is Mexico going to be available to us? Mexican oil isn't available during peace. I don't think we can count on them, because they have to act in their own best interests."
Mr. Strauss opposes the sale of the silver for additional reasons. First, he said, during World War II silver was a useful substitute for copper. Second, paper money loses its value during wartime, and the British had to issue silver coins in India to bolster morale. Third, he says, none of the essential uses of silver, as in batteries and electrical contacts, have been replaced with other elements.
Another reason analysts say silver should not be sold is that the world is running out of it. This is particularly true since a higher level of technology demands a higher silver consumption, according to Fred Smith, an aide to Rep. Larry McDonald (D) of Georgia.
"After we sell it, there's no place to get it. It seems foolish to give it away. During World War II we lent it to other countries to bolster their troops' moreale."
"This seems like a stupid way to meet a target," he said."The price will go down once everyone knows the government is trying to sell it. And speculators would charge high prices if they saw the government had none."
The stockpile has been in existence since 1939, and has been the subject of repeated selling, starting with President Kennedy. There is increased concern, however, that both the money and the material will be lost if selling continues.