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Silver Prices Kindled By Unorthodox Investors

Jessica Robinson


SPOKANE, Wash. - The price of silver has gone sky-high. That's spurred talk of new mine developments in north Idaho's Silver Valley. It's one of the most productive silver-mining regions in the world. But the silver market is especially finicky. In part, that's because the people who buy silver are not your typical suit-and-tie investors.


The people we're talking about don't invest in that you-have-a-piece-of-paper-that-says-you-bought-something sense of the word. When these investors buy silver, they actually buy silver.

Isaac O'Bannan: "I'll show you what they look like. You can get about 10 or 12 of those bars in a bucket. That's 100 ounces per bar. "

Isaac O'Bannan is the manager at CoinsPlus in Spokane where he sees the supply and demand of silver first hand.

Isaac O'Bannan: "I had a customer who sold 3,000 ounces. In buckets. Two-gallon buckets. Seventy pounds each."

The guy needed a truck for delivery.

Isaac O'Bannan: "Four buckets like that you walk out of here for $250,000."

And the guy with the buckets isn't alone. O'Bannan says new silver investors have been streaming into the store. Even he buys it.

Isaac O'Bannan: "I've got a bag of silver at my house. Because a bag of that stuff has always always always bought food. Always. Your greenback has not."

And there's the crux of it. O'Bannan is one of those silver investors who have deep mistrust of the financial system -- the U.S. dollar, the Federal Reserve, banks.

David Morgan runs and puts out a monthly newsletter on the metals market from his home north of Spokane.

David Morgan: "A lot of silver investors think of more a philosophical reason for owning it than just I want to make money on it. They're a bit odd, I'll put myself in that odd category as well."

Morgan's newsletter may be the go-to source for a lot of silver investors. But he knows on Wall Street he's considered part of the fringe.

David Morgan: "'How unsophisticated, you know how archaic. What a barbarous relic.' That's how they would see us. I mean why would you need something as base as a silver coin to transact business, is that ridiculous or what?"

Now, if a few words from the head of the Federal Reserve can send Wall Street into a tither, to a silver investor, newsletters, blogs and other non-traditional media can hold the same sway.

Here's an example. This video, called "The End of America" went viral last year. It suggests the dollar is doomed.

Porter Stansberry: "The less the government knows about where you have your money, the better. They will simply have a hard time taking what they don't know you have..."

The video, by Porter Stansberry, sent people flocking to coin shops.

At $19 billion, silver is a relatively small market. That makes it susceptible to the whims of investors. And it doesn't always go up.

Take the first week in May, when investors were reminded just how volatile silver can be.

CNNMoney video: "Well silver is not such a precious metal today..."

The price took a sudden nose-dive on Wall Street, dropping from $50 to $35 an ounce.

Anthony Neglia is the president of Tower Trading of New York City, Inc. He's traded silver options for nearly 30 years and says it's generally headed up. But he attributes that more to growing industrial demand for silver in TVs, digital cameras, cell phones and other technology.

Anthony Neglia: "Silver has a lot of uses. And it moves on those and it can move on any one of them at any given time, and that's the beauty part about silver."

Back at CoinsPlus, investors are still hoping to see a return to $50 an ounce. I ask O'Bannan if you have to be risk taker to go for silver.

O'Bannan: "No, you have to be a risk taker to leave money in the bank."

To O'Bannan, the solid investment is the one he can reach out and feel.

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Silver price charts:

Historical silver prices:

Copyright 2011 Northwest News Network