Barclays silver ETF begins trading Friday

Section:

From Reuters
Thursday, April 27, 2006

http://asia.news.yahoo.com/060427/3/2jpvp.html

HONG KONG -- Jewellery makers in Hong Kong, a leading world
supplier, are switching to silver because they cannot predict how
high gold prices will go, industry officials said on Thursday. Gold
touched a 25-year high last week, driven by high oil prices,
concerns over inflation, dollar uncertainty and geopolitical
tensions. The price stood at $641.00 an ounce at 0808 GMT on
Thursday.

Silver has soared 50 percent this year, hitting $14.68 an ounce last
week. But it traded on Thursday at $12.84.

"We use a lot of silver these days," said Saiwing Lam, chairman of
Hang Fung Gold Technology Ltd. The firm was using 100-200 kg of
silver a day, on average, up 30-40 percent from last year.

"Silver jewellery is doing well in Europe and the U.S.," said
Ellison Chu, senior vice president for the Standard Bank's precious
metals division in Hong Kong.

Edward Cheung, chairman of the Hong Kong Jewelry Manufacturers'
Association, said many plants had added production of silver
jewellery to keep business volumes.

He said Hong Kong companies operated more than 2,000 jewellery
processing plants in China and exported most of their products duty
free.

China's imports of silver rose 244 percent on the year to 226,780 kg
in the third month this year, while its exports fell 12 percent to
427,549 kg.

More than 300 tonnes of silver were sitting in warehouses in Hong
Kong, double from the levels two years ago, traders said.

Facing record-high gold prices, jewellery plants needed to buy gold
immediately after they received orders, Cheung said, adding that the
costs of such practice were high.

"Some plants have sold their gold reserves and switched to make
silver jewellery," Hang Fung's Lam said.

"Some have closed. They lost a lot of money on high gold prices,"
Siuhei Lau, director of gold jewellery maker Evergood Jewellery Co.
said, adding that the firm's business would drop at least 50 percent
on the year in 2006 if gold prices stayed at $600-$700 an ounce.

Hong Kong exported HK$3.3 billion ($426 million) worth of jewellery
in January-February 2006, up 6 percent on the year, the association
said. Its biggest buyers are the U.S. followed by the U.K.

"I do not wear gold jewellery. It looks old," office worker Ms Yiu
said. Her boyfriend, Mr. Ng, bought a silver ring for her for
HK$800.

"I wanted to buy platinum, but it is too expensive. All precious
metals are expensive now and silver is the cheapest," Ng said. "She
may be willing to wear gold for her wedding but she wants the
diamond."

In Hong Kong, silver jewellery is a trendy accessory for young
people and can be bought in little shops in streets and malls.

But many large jewellery shops do not carry silver jewellery because
the product is cheap. Those shops sell silver-colour white gold,
which contains 75 percent of gold and 25 percent of other metals
such as palladium.

To add to silver jewellery's value and attract middle-class
consumers, jewellery makers coat white gold on silver jewellery.

"It does not turn black. We give you a warranty for one year," a
saleswoman for Zn Concept said, referring to its silver jewellery.

Popularity of silver jewellery is also growing in China as young
people benefit from the country's fast-growing economy and can
afford low-end jewellery as a fashion accessory.

"In Chinese cities, silver jewellery shops are emerging everywhere,"
Chen Jinhua, deputy general manager for Shenzhen Baohuaxing
Jewellery Co. Ltd. said.

Chen said the government of Huadu city in Guangdong province aimed
to build a silver jewellery base, although the province already had
one in Panyu county.

China's jewellery market can create a revenue of 180 billion yuan
($22.45 billion) by 2010 and an export value of $7 billion, analysts
say. ($1=HK$7.7542, 8.0162 yuan.)

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