* Silver hits record high near $50 first time since 1980
* Spot gold hits record for a second day as dollar drops
* Inflation, economic uncertainty cited after Bernanke
* Coming up: U.S. personal income on Friday
(Recasts, adds comments, details)
By Frank Tang
NEW YORK, April 28 (Reuters) - Silver soared to an all-time
high on Thursday and gold rose to another record, as the dollar
fell and as signs that the Federal Reserve would maintain a
loose monetary policy stoke inflation worries.
Silver briefly climbed to within a whisker of $50 an ounce,
eclipsing the peak hit when Texan brothers William Herbert and
Nelson Bunker Hunt sought to corner the silver market three
decades ago. The metal later pulled back on technical selling.
Option traders reported strong buying of long-dated
in-the-money silver calls, indicating bullish investor
expectations. Also, the value of gold in terms of silver fell
to less than 32 ounces on Thursday, the lowest on record
according to Reuters data dating back to 1982.
"I dont think the market has topped out. While there are
some inflation concerns similar to what we had back in 1980,
the reality is that metals are going up as an alternative asset
featuring gold, and by proxy silver," said Bill O'Neill,
partner of commodities firm LOGIC Advisors.
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Take a Look on rise of gold, silver []
Graphic of silver best-performing commodity:
http://r.reuters.com/duj88r
FACTBOX-Gold milestones to record high []
Special PDF report on gold, silver rally:
http://link.reuters.com/xuk29r
India silver recycling to curb imports []
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Spot silver <XAG=>, which has rocketed nearly 60 percent so
far this year, rose 1.6 percent to $48.53 an ounce by 3:29 p.m.
EDT (1929 GMT), having earlier hit a record $49.51 an ounce,
surpassing a peak of $49.48 on Jan. 18, 1980 set during the
Hunt brothers era.
A U.S. jury found that the Hunt brothers conspired to
manipulate the prices of silver in 1979-80. During that time
the price of U.S. silver futures soared from below $11 an ounce
to a record $50.35, then tumbled back to around $11.
Soaring prices also hurt the bottomline of silver
manufacturers, including photography company Eastman Kodak
<EK.N>, which said on Thursday a hike in raw material costs,
particularly in silver, led to a decrease in its film business
revenue. []
Despite a continued decline of film photograhy, which used
to be a major silver buyer, the industrial sector typically
consumes half of global silver supply.
U.S. GROWTH SLOWS, INFLATION RISES
Spot gold <XAU=> rose to a lifetime high of $1,538.35 an
ounce, breaking records for the ninth time in 10 sessions. It
was later up 0.6 percent at $1,535.60 an ounce, up 0.6 percent.
U.S. June gold futures <GCM1> settled up 0.9 percent at
$1,531.20.
Precious metals rose after as data showed U.S. economic
growth braked sharply in the first quarter as higher food and
gasoline prices dampened consumer spending, sending inflation
rising at its fastest pace in 2-1/2 years. []
Adjusted for inflation, however, the current price of
silver is about two-thirds below its record at over $130 an
ounce, while gold was only a third below a peak of $2,200. Both
records were set in 1980.
Silver has surged 11 percent in just the last two days,
even after Monday's technical failure that almost sent prices
toward $50 before pulling back sharply.
Year to date, silver was up almost 60 percent, currently
the best performing commodity, sharply above gold's 8 percent
gain.
SILVER OPTIONS SEEN BULLISH
On the silver options front, heavy buying of call options
indicated investors continued to bet silver prices to rise
further.
"I am seeing all types of bullish call buying. They are in
the money and far out, including December, March and September
calls," said COMEX options floor trader Dominick Cognata. "They
are looking to buy cheap call spreads because this thing looks
like it may shoot up to to $70 or $80."
Gold and silver's rally was supported by follow-up buying
after Federal Reserve Chairman Ben Bernanke signaled on
Wednesday that the U.S. central bank is in no rush to scale
back its support for the economy. []
"The metal markets are recognizing that (Fed policy) and it
is being priced in. What monetization means is that, down the
road, we will have more inflation," said Robert Lutts, chief
investment officer of Cabot Money Management, which oversees
more than $500 million in client assets.
In platinum group metals, platinum <XPT=> gained 0.8
percent to $1,834.40 an ounce, while palladium <XPD=> rose 1.3
percent to $773 an ounce.
Prices at 3:27 p.m. EDT (1927 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCM1> 1531.20 14.10 0.9% 7.7%
US silver <SIK1> 47.520 1.562 0.0% 53.6%
US platinum <PLN1> 1839.90 20.70 1.1% 3.5%
US palladium <PAM1> 775.30 17.20 2.3% -3.5%
Gold <XAU=> 1535.60 9.20 0.6% 8.2%
Silver <XAG=> 48.53 0.77 1.6% 57.3%
Platinum <XPT=> 1834.40 14.95 0.8% 3.8%
Palladium <XPD=> 773.00 9.55 1.3% -3.3%
Gold Fix <XAUFIX=> 1535.50 4.50 0.3% 8.9%
Silver Fix <XAGFIX=> 48.70 340.00 7.5% 59.0%
Platinum Fix <XPTFIX=> 1835.00 15.00 0.8% 6.0%
Palladium Fix <XPDFIX=> 777.00 8.00 1.0% -1.8%
(Additional reporting by Doris Frankel in Chicago, Liana Baker
and Christopher Kelly in New York, Rebekah Curtis and Amanda
Cooper in London and Lewa Pardomuanin Singapore; Editing by
Marguerita Choy)
