Robin Butler on Twitter

May 2011

Occasionally I write a piece for a newsletter and then, at the last moment something occurs that I feel must take precedence. So I usually put it aside in the hope the subject becomes relevant at some later date – and it is surprising how often that occurs. This is one of those occasions. I had written about the price of bullion silver last December, but then a Chinese vase sold for £53,000,000 which seemed to be much more newsworthy and relevant. Actually the vase has also been in the news again, but more of that later. However, it is silver that has hit the headlines again in a big way. So, I’ll begin with my December writings and then fast-forward you to the happenings of last week.

“I remember, quite vividly, the story of Nelson Bunker Hunt and his brother, William Herbert Hunt, who in the mid-late 1970s tried to corner the world market in silver. They were Texas oil billionaires, and started buying silver when it was trading at about £4 an ounce. Gradually the price rose to £5, then £8 an ounce. Then in 1979 the market in silver began to get out of hand, and when the price reached £12 and a few days later £15 an ounce, people were rushing to sell their antique silver to bullion merchants to melt. Indeed there was quite an avalanche of antique silver being melted. Actually a lot of thoroughly bad old silver was melted, but most good Georgian pieces were saved. In the period of 1978- 80, I saw the auction prices of standard Georgian candlesticks rise from about £300 to about £2,400 a pair.

“Eventually by 27th March 1980, ‘Silver Thursday’, the price topped £25 an ounce and the inevitable happened. The Hunts had over-reached themselves buying silver ‘futures’, and ran out of money to meet their commitments. The price of silver crashed, before settling back to about £4.50 an ounce, and the Hunts vanished back into obscurity so far as the world of silver was concerned. They lost a billion or so, but they are still rich men.

“About a year ago the ‘scrap’ price of silver (that is the price you can sell hallmarked sterling standard silver to be melted down) was in the region of £8-9 an ounce, but today it is over £15.50 ... and rising quickly. Already, the scrap price of old 3-piece tea-sets is more than their retail price a year ago.”...

Fast forward to this week. Six months on, and history of the late ‘70s and early 80s has repeated itself. The scrap price of silver did indeed rise very quickly in the opening months of this year, and it peaked on April 22nd at nearly £30 an ounce. Commodities traders and speculators (I prefer to call them gamblers) had had enough of the bullish market and sold. This time round, the rises and falls have been less dramatically quick than those in 1980, but already the price has dropped to £18.50. It was reported that a tonne (1,000 kg., or about 32,150 ounces) of silver had been sent for melt in a single day just recently. Silver is a valuable commodity, not just for the dining table and jewellery trade, but also in industry. The use of silver in photography has all but died with the advent of digital imaging, but silver is widely used in the medical and electronic industries, as it is an excellent conductor. With high industrial demand, I would not like to predict where the market in it will go, but a look at a graph of its price history seems to indicate its current price will increase again albeit slowly. My guess is that it will be back to somewhere near £30 an ounce by the end of the year, probably with a few erratic variations in the interim.

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 There is a subsequent tale to tell about the very expensive Chinese vase about which I also wrote in December. Its sale has thrown up serious problems in that sector of the market. The principal one was simply that the buyer at auction failed to produce the purchase money, or at least he had not when I last visited the story. I understand that the buyer had been unable to have funds released from China, but also that there may be other interpretations of the events which led to non-payment. In any event I hear that the auctioneer has actually been to China to try to conclude the sale. With Chinese works of art being very much in the foreground of current top-end auction prices, particularly in English provincial auction rooms, where prices have coaxed important Chinese ceramics, jades and bronzes on to the market, there is a lot of concern about how to safeguard the interest of both the vendors and the auction houses themselves. England is not alone in its concern; the French are now demanding up-front deposits from Chinese bidders before an auction starts on their more valuable pieces. It is an on-going situation which will affect prices and the general market where the Chinese are involved - perhaps including wine, where they are highly active especially in first-growth clarets generally, and Chateau Lafite in particular.

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A brief postscript: Antique magnum decanters are really quite difficult to locate, but I seem to have become known for them, and currently I have more than I have had for some time. Do have a look in both Georgian, and Victorian decanters on my website, as there are some very practical ones, and even a pair!

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