SILVER MARKET FOR 1962 The areas of industry showing the greatest improvements were in the metal joining and the electrical and electronic industries, both for defense and civilian needs. Imports of silver into the United States during 1962, estimated at about 80,000,000 ounces, increased nearly 64% over the previous year, while exports dropped about 72% to 11,000,000 ounces. Consumption of silver outside the United States during 1962 showed a decline of over 4% from the 1961 figure. Most of the decline was in coinage uses which dropped 12%, whereas industrial consumption declined only about 1%. We believe that the price trend for silver in 1963 will continue upward, and that within the year the quotation in New York could well approach the so-called monetary price of 129¢ an ounce. It would appear that world demand in 1963 probably may be met by market supplies without the need for recourse to Treasury monetized stocks, but only at prices perhaps even higher than have occurred so far. Furthermore, we must conclude from the evidence at hand that looking beyond 1963 industry will have need for Treasury silver, and that the price will then be around the 129¢ level at which silver certificates can be redeemed. REVIEW OF THE SILVER MARKET FOR 1962 The year 1962 has been a very active one for silver. The market has had to adjust to conditions quite different from those of the past several years, and in the course of this adjustment prices have increased by more than 30%. Up until the end of 1961 the price of silver had been stabilized by United States Treasury purchases and sales under the Act of July 31, 1946. In contrast the market in 1962 experienced frequent, and at times violent, price fluctuations depending on the unpredictable changes in the forces of supply and demand. The return to free market conditions, however, remains incomplete so long as the silver transactions tax is in effect. This tax, amounting to 50% of the profits realized, has discouraged the establishment in the United States of a market for trading in silver futures, and the domestic silver industry has been deprived of the advantages of such a market. The background for 1962 was set in the closing weeks of 1961, and a brief review of the events of those weeks may be helpful to an understanding of subsequent developments. On November 28, 1961 the United States Treasury, by Presidential directive, suspended sales of non-monetized silver, known as free silver. Treasury sales in 1961 accounted for more than half of the silver consumed in the United States for industrial uses. Therefore, when these sales were suspended the reaction in world markets was immediate, and the price of silver jumped sharply not only in New York but in other centers as well. THE NEW YORK MARKET The story of silver in the New York market during 1962 can be divided into three phases. The first and longest phase covered the period from the beginning of the year until the end of July, during which time the price fluctuated between a low of 1014¢ and a high of 105¢. The second phase, from the beginning of August until mid-October, was characterized by a surge of demand in the face of dwindling offers which resulted in another round of sharp price increases. The third phase, extending from October through the end of the year, saw a return to relative stability with moderate fluctuations around the 120¢ level. A condensed long range price chart, together with brief explanatory notes, is included in this Review. It presents graphically the history of the price of silver in New York since before World War I and shows the relationship of present price levels to those of the past. The first phase of the market in 1962, lasting from the beginning of January to the end of July, was a period of considerable stability following the initial violent price rise which had taken place during the closing weeks of the previous year. During that period the New York silver price had jumped from 915%¢ an ounce on November 28, 1961 to 105¢ by mid-December, an increase of nearly 15% in a little over two weeks. At this price, stability had been restored by action on the part of Mexico, which began selling silver out of government stocks. These sales by Mexico induced some profit taking on the part of speculators and effectively stopped further price rises. As offerings increased, buying interest dropped off, and prices became somewhat weaker. A series of small declines carried the New York quotation from 105¢ an ounce on January 2nd down to 1014¢ by February 23rd, which proved to be the low for the year. The Mexican authorities reversed their policies at this point and entered the market as buyers rather than sellers. Accordingly the price steadied and even recovered slightly to 10134 on February 27th, where it remained unchanged for the next four months. During the first part of the year speculative holdings abroad, together with surplus inventories in the hands of consumers, both domestic and foreign, were substantially reduced. We estimated at the end of 1961 that on a world wide basis the total of such speculative holdings and surplus inventories combined amounted to perhaps as much as 80,000,000 ounces, divided about equally between the two categories. Revised estimates indicate that the total probably did not exceed 75,000,000 ounces, and that the larger part, perhaps as much as 50,000,000 ounces, consisted of speculative holdings, and only 25,000,000 ounces represented surplus inventories. By June speculative holdings were down to about 10,000,000 ounces, and surplus inventories held by fabricators were estimated at some 20,000,000 ounces. At this point there was a renewal of buying interest on the part of industrial users, and at the same time liquidation of speculative holdings came to a stop. In fact some renewed speculative demand began to make itself felt. As a result, the price went up to 103¢ on June 21st, and by July 24th it again reached 105¢ where it had been at the beginning of the year. Throughout most of the first seven months of 1962, the price in London was generally lower than that in New York, |