Silver prices surging upward

KELLOGG - The price of silver is at its highest in two years.

Silver worked its way up to consistently top $20 per ounce since closing at $20.009 on Sept. 8. The last time the price of silver has reached such heights was 2008.

"It's been a long time coming," said Mike Dexter, general manager of the Lucky Friday mine. "I'm glad that it's here."

The increased price of silver means more profitability for the mine, although production will remain the same, according to Dexter. The increased earnings will trickle down to the hourly employees through monthly profit share payments.

U.S. Silver's Galena mine manager Andy Gaudielle shared Dexter's enthusiasm with regards to the high price of the valley's prominent precious metal.

"We certainly benefit from rising metal prices," Gaudielle said.

However, they will continue to operate with the expectation that prices will fluctuate.

He is also pleased to see that lead, copper and gold prices remain firm. Gaudielle said people who follow silver are very bullish and feel that silver is undervalued in comparison with other metals.

"I caution that because silver is much more volatile in price than gold," Gaudielle added. "We just have to be ready to weather a downturn."

The last time the price of silver hit $20 per ounce was in the first quarter of 2008, according to David Bond, longtime mining journalist. However, this is small change compared to the peak of $50 that silver hit in 1980.

"You just had a great big mess around the world," Bond said, "and silver and gold just took off."

In order to meet the 1980 silver price peak today, one would have to have an inflation-adjusted price of $125 to $150 per ounce of silver.

"Silver and gold are commonly misunderstood as the predictors of inflation," Bond explained. "That's a crock. What they really are is indicators in the faith in the U.S. dollar. What you're seeing now is a genuine fear that the dollar may fall off the cliff."

As the price of silver fluctuates, Bond indicated there will always be a demand for it. If the dollar were to collapse and gold were used instead, silver would be the change received in any transaction.

"It's always been the poor man's money," Bond said. "It always has been and it always will be, and that's its beauty."