Silver prices fatten paychecks

Workers at the Lucky Friday Mine could pocket $10,000 or more in bonuses this year, a benefit of rising silver prices.

Silver inched past $12 an ounce in trading Thursday, its highest price in 22 years. Analysts attributed the 34-cent increase to strong investor demand and speculative buying, triggered by a weak dollar, high oil prices and strong gold prices.

It’s all good news for miners. A steady increase in silver prices over the past two years has triggered a contract provision at the Lucky Friday that gives hourly workers a bonus when prices hit certain benchmarks. The underground mine near Mullan, Idaho, breaks even at silver prices of $5.50 an ounce. Its 200 workers are also part of a profit-sharing plan.

Together, the two incentive programs are padding workers’ paychecks by $5 to $6 an hour, said Vicki Veltkamp, spokeswoman for Hecla, which owns Lucky Friday.

“Overall, it means thousands of dollars to each employee,” she said. “These prices are great for Hecla Mining Co. It’s also good for the shareholders, and it’s good for our employees.”

Workers at the Galena Mine near Silverton, Idaho, are also profiting from higher silver prices. The mine, owned by Coeur d’Alene Mines Corp., also ties bonuses to silver prices. But the incentives stop growing at silver prices of about $9 an hour.

In a recent interview, Hecla CEO Phil Baker said silver prices could hit $15 an ounce this year, based on demand and slow growth in mine supply.

In addition to jewelry, silver is used for photography and industrial purposes. For at least 15 years, the above-ground stocks of silver bullion have been dwindling, Veltkamp said. The run-up in prices is part of a long-awaited industry comeback, she said.

Silver and gold are also moving back into favor with investors, said Mike DiRienzo, executive director of the Silver Institute, a Washington, D.C.-based trade group. They’re regaining their allure as part of a well-balanced portfolio, he said.

Part of investors’ enthusiasm is tied to plans for the first silver exchange-traded fund, proposed by Barclays Global Investors. ETFs allow investors to purchase commodities without having to pay shipping or storage fees.

In this case, Barclays would own the silver bullion, and investors would buy shares of it through a fund. ETFs are expected to boost the physical demand for silver.

Silver was one of numerous commodities that rallied Thursday. For the first time in 25 years, gold futures climbed to more than $600 an ounce.

Higher prices are helping everyone in the industry, said Doug Belanger, president of Gold Reserve Inc., a Spokane firm that is developing a gold mine in Venezuela.

“Our stock is up about 60 percent in the last two weeks,” he said. “It makes the job of financing our mine that much easier.”

People who invest in gold or silver stocks tend to be a fairly select group, Belanger said, so even modest increases in the number of investors can help drive up mining companies’ stock prices.

And at the moment, he said, “there’s an awful lot of money out there, looking for a place to invest in gold.”