No Silver Lining Left for Users of the Metal

After skyrocketing 84% in 2010, silver prices have jumped another 54% so far this year. In comparison, gold is up 7.7%, hitting a new record of $1,530.80 an ounce on Thursday.

Much of the recent silver price jolt has been fueled by investors who are piling into exchange-traded funds and bullion as a way to hedge against inflation or currency declines.

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At DuPont Co., silver is the largest metal cost in the unit that makes silver paste, which is needed for plasma TVs and other electronic products. DuPont is working on technologies to reduce or replace silver when possible, says David Miller, the division's president. "We're looking for alternatives," he says.

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The Chinese company last year introduced its "Pluto cell," made from copper costing $4.25 a pound. But 90% of Suntech's solar cells still require the use of silver.

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The influx of scrap silver and manufacturers' efforts to reduce reliance on silver eventually will restore gravity to the market, predicts Philip Klapwijk, executive chairman of GFMS Ltd., a London metals consulting firm.

"But I don't think things will change very quickly because of silver's unique characteristics," he says. GFMS expects industrial demand for silver to grow at a 6.5% annual rate through 2015, propelled by emerging markets and the technology sector.