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. Last Updated: 07/27/2016

Silver's Shine Attracting Big Investors Worldwide

SEATTLE -- The biggest rally in silver since 1979 is benefiting the commodities market's largest investors, including Bill Gates, the world's richest man. The Microsoft chairman's Cascade Investment is the second-largest shareholder in Canadian-based miner Pan American Silver. His 3.32 million shares of Pan American are valued at about $85.2 million and have tripled since 1999, when Gates made the investment.

A 55 percent jump in the past 12 months has put silver on track for its best year since the billionaire brothers Nelson and William Hunt caused prices to skyrocket in 1979 by hoarding the metal. Silver, above $10 an ounce for the first time in 22 years, may reach $15 by year-end on rising demand from jewelry makers and commodity investors, said Philip Klapwijk, executive chairman of London-based metals researcher GFMS.

"Silver is a market that sort of acts like a freight train," said Frank McGhee, head metals trader at Integrated Brokerage Services in Chicago, who forecast a high of as much as $13. "It's really slow moving, and once it gets started in a direction, you cannot stand in front of it."

Silver for May delivery rose as much as 10.5 cents to $10.840 per ounce on the Comex division of the New York Mercantile Exchange. Prices, after a six-year rally, are up 21 percent since Dec. 31.

The metal also has lured billionaire Warren Buffett. His Berkshire Hathaway bought 129.7 million ounces of silver in 1997, most at less than $6 an ounce. He will not say if he still owns it.

Silver "is a diversification tool," said Graham Birch, who helps manage $8.5 billion in mining assets for London-based Merrill Lynch Investment Managers, the world's biggest investor in gold stocks. "Investors are putting more money in commodities, and within that there are some hotspots like silver."

The gains in silver are the biggest since the 1970s. Buffett's stockpile, if still held by Berkshire, would be valued at $1.39 billion, about $700 million more than from June 1997 to January 1998, when the investment was made.

This year, rising demand may help silver outperform gold and copper, said Michael Kagan of Legg Mason's CAM North America in New York. Copper rose 37 percent last year, touching a record this month, as demand from China depleted supply. Gold reached a 25-year high in February as investors bet against the dollar.

The 30 percent gain in silver last year exceeded the 3 percent rise in the Standard & Poor's 500 Index and the 2 percent return on the 10-year U.S. Treasury.

"Silver supply-demand fundamentals are tightening this year, while copper's may loosen in the second half," said Kagan, who owns silver and manages funds that hold shares of Apex Silver Mines in Denver and Toronto-based Barrick Gold. "Silver is going to outperform gold until we get some new mines, and that's not coming on for another few years."