MARKET WATCH
| Month |
High |
Low |
Average |
| January 2005 |
6.85 |
6.43 |
6.63 |
| February 2005 |
7.52 |
6.55 |
7.07 |
| March 2005 |
7.60 |
6.91 |
7.27 |
| April 2005 |
7.33 |
6.90 |
7.13 |
| May 2005 |
7.44 |
6.84 |
7.05 |
| June 2005 |
7.53 |
7.03 |
7.31 |
| July 2005 |
7.24 |
6.83 |
7.02 |
| August 2005 |
7.284 |
6.69 |
7.01 |
| 2004 |
8.21 |
5.51 |
6.67 |
ASSOCIATION NEWS
News:
Meetings:
Note:
HURRICANE KATRINA DEVASTATES GULF COAST
As the federal government begins to wrap its arms around the wreckage left behind by hurricane Katrina the Silver Users Association would like to hear from its members on any help they may be lending to the relief effort. To date the American Red Cross has raised over $700 million for this effort. When tragedy hits the American spirit seems to shine. This was and still is the case with the efforts to rebuild the Gulf Coast. SUA has heard from some of you on what you or your individual company's are doing. We would like to hear from the rest of you. With your help we can help out others still trying to figure out the best way to help by putting your company's activities up on the web site under a new section "Katrina Relief."
Please forward any and all information to pmiller@mwcapitol.com.
PRESIDENT AND CONGRESS STEP UP FOR HURRICANE VICTIMS
When Congress returned from a month long recess, it was expected that they would begin debate on repealing the estate tax, possibly debating Social Security reform, and healthcare reform. The tragedy in the Gulf Coast region has significantly altered the agenda on Capitol Hill for the remainder of the year and possibly next year. The focus now is on rebuilding the Gulf Coast.
Shelved for now (at least in the near term) consideration of an estate tax repeal bill by both the House and Senate. The obvious reason was that it seemed inappropriate to discuss tax relief of this nature before Congress addressed the immediate needs of those affected by Katrina. With the cost of the devastation left by Katrina to reach $200 billion or more, Congress must wrestle with how to pay for this without increasing the debt. To do this, the feeling is that the estate tax must have to wait until such time as Congress can get a handle of the how it plans to pay for the rebuilding effort. This may not be bad news for supporters of estate tax repeal. If a vote was taken today, it is uncertain whether this measure would pass the Senate. SUA will continue to work with those members of Congress pushing for repeal.
There will be other tax bills this year. We expect Congress to consider the tax reconciliation bill. You will recall, this is the legislation the Senate can approve by a simple majority. They can do this because they passed a budget resolution earlier this year that earmarked $70 billion in net tax relief. We had thought a further extension of the temporary increase in the direct expensing allowance, a further extension of the temporary cut in capital gains and dividends taxes, and a further extension of the temporary relief from the personal Alternative Minimum Tax were the primary candidates for inclusion in the tax reconciliation bill. You may recall, the budget reconciliation process does limit Congress to a five-year window, which is why we did not expect estate tax repeal to be included.
In addition, Congress is considering whether or not to take up a Katrina-related tax relief package during reconciliation. In which case, some of the other tax provisions might fall out. Or, Congress could opt for two tax bills. One Katrina related and the other "traditional" reconciliation, in which case the aforementioned primary candidates would be those we original anticipated. Or we could even conjure up a scenario in which Congress acts on Katrina-related tax relief, passes a "traditional" reconciliation bill, and finds itself in session in late November or December, with the economy needing a boost, and passes the temporary AMT relief and loads on a few other items.
SMALL BUSINESS ADMINISTRATION LENDS HAND TO KATRINA RELIEF
The Small Business Administration offers loans of up to $1.5 million to businesses of all sizes and non-profit organizations to repair damage to real estate, machinery, equipment and inventory. Economic Injury Disaster Loans (EIDLs) are also available to small businesses unable to pay bills or meet operating expenses. For more information, visit SBA's website at www.sba.gov/disaster.
The Internal Revenue Service has established a special toll-free telephone number for use by taxpayers affected by Hurricane Katrina. People affected by Katrina who need help with tax matters can call 1-866-562-5227. Taxpayers can call the special number Monday through Friday from 7:00 am to 10:00 pm local time. Callers to this dedicated telephone line can find out about available tax relief, get free copies of their tax return transcripts, and receive Disaster Tax Loss Kits. Callers may also be referred to the Federal Emergency Management Agency's assistance lines for additional help. Affected taxpayers who need copies of tax returns to apply for aid or other purposes can have the normal user fee waived by writing "Hurricane Katrina" in red across the top margin of their Form 4506, Request for Copy of Tax Return.
SILVER EXCHANGE TRANSFER FUND (ETF)
Between 1966 and 1970, U.S. Treasury sales of silver were a major secondary source of supply. Because silver had been a U.S. monetary standard along with gold, the U.S. government held the world's largest source of secondary supply in an effort to meet a growing production/consumption deficit. In 1965, it appeared that in less than two years the Treasury would effectively lose control of the price of silver. If silver had been allowed to rise above $1.40 per ounce, the silver content of U.S. coins would have been worth more than their face value, causing them to disappear from circulation. Under the Coinage Act of 1965, Congress eliminated the use of silver in coins and authorized the mining of cupro-nickel substitutes and the sale of silver to the public. The right of holders of U.S. silver certificates to redeem them for silver was suspended in 1968. The following year, a federal ban on the melting of U.S. coins was lifted, freeing anywhere from 400 to 700 million ounces for secondary recovery.
In late 1970, the General Services Administration was authorized by Congress to release the national strategic stockpile of silver to the Treasury Department, primarily for coinage of new commemorative silver dollars (40 percent silver content). The same act provided for the auction of approximately 3 million old uncirculated silver dollars (90 percent silver). In 1973, the Cost of Living council freed commercial-grade silver from price ceilings imposed the year before to allow domestic silver to advance to current international price levels.
Silver has reacted erratically to world political and economic news in recent years. The New York spot settlement price for silver has ranged from a low of $3.92 in 1975 to a high of $48.70 in 1980.
In the early 80's, the U.S. government's strategic stockpile of silver was locked in by law at 139.5 Moz. Congress has since authorized legislation to dispose of these stockpiles. In late 2000 the U.S. Defense National Stockpile Center delivered its remaining stockpile of nearly 15 Moz to the U.S. Mint for coinage programs. Since 2001, the U.S. has had to purchase silver for its coinage programs from the open market. This has boosted silver consumption by 1% annually.
Background on ETF
An ETF is an Exchange Traded Fund, created under the Investment Company Act of 1940. They are index-based products, which hold a portfolio of securities that is intended to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the underlying benchmark index. In the case of a Silver ETF, the index would track the silver price and be backed by physically vaulted silver. Gold ETF's gained popularity in the recent commodity bull markets as investors were attracted to an alternate form of gold investment other than mining shares, options, futures and physical. Many are interested in gold from a 'buy and hold' perspective. Each unit that is bought on the gold ETF has resulted in physical gold metal being purchased on the open market and stored in a vault. In total, these gold ETF's have contributed to 250 tons of gold being purchased in the open market, approximately $3.4 billion dollars.
Impact of Silver ETF
Fortunately we do not have to look back very far to see the impact a significant amount of allocated silver would have on the market. It was 1998 when Warren Buffet purchased over 100 million ounces of physical silver and the spot price rallied over $3 dollars and one month lease rates soared over 30%.
Commodity markets such as Palladium have proven that consumers will search for alternative sources to substitute their need for metal if the market becomes too pricey or illiquid. As it is, silver can be an illiquid market because there are few central banks which own silver. Silver is inexpensive in terms of commodities, and its volatility is typically 2-3 times that of gold.
These are both reasons investors are drawn to the market. A silver ETF would only exaggerate silver's illiquidity given the sheer volume of physical silver needed to be shipped and stored. While a silver ETF might initially provide price benefits for producers, we believe it would disrupt the market in the short term and may harm the market in the long term.
SUA Position
The Silver Users Association opposes the creation of a silver ETF because of the concerns that doing so will require the holding of physical silver in allocated accounts, thus removing large amounts of silver from the market. By doing so, the ETF most likely would cause a shortage of silver in the marketplace. This removal of large quantities of physical silver could have a negative impact on silver-industry specific employment as well as the overall economy, both through job losses and inflation.
The Silver Users Associations supports the buying and selling of silver as an investment. There are already several ways to do so without creating a potentially harmful situation to industry. We don't endorse a silver ETF because of the potential liquidity problems it would create. The SUA urges the SEC to take these issues into consideration before it decides whether or not to issue a silver ETF.
BARCLAY'S DENIES IT LOST U.S. APPROVAL FOR SILVER TRUST
NEW YORK, Sept 15 (Reuters) - Barclays Global Investors was still awaiting regulatory approval from the U.S. Securities and Exchange Commission for its iShares Silver Trust, the asset management arm of Barclays Plc said on Thursday, denying a report that its application was rejected.
A spokeswoman for the leading exchange-traded fund (ETF) provider said there had been no change to the status of the trust since an amended SEC filing was made earlier this month.
Barclays first filed in June for approval for the trust, to be backed by silver bullion stored in vaults in London.
The report on Thursday from an energy and commodities news wire service said the SEC turned down Barclays's application.
"The rumor is false," the spokeswoman said. "There is no news to report. Nothing has happened with the filing."
Barclays has said the timing of any possible approval of the silver trust would be up to the SEC. It took roughly a year to bring Barclays' gold ETF to market after its filing.
Barclays has been exploring a range of commodity products as investors were increasingly expressing interest in diversifying portfolios.
The firm also is seeking approval of its iShares GSCI Commodity-Indexed Trust, which is based on the Goldman Sachs Commodity Index of U.S. commodities futures contracts.
Barclays' iShares COMEX Gold Trust launched on the American Stock Exchange in January.
(The Silver Users Association is checking with its contacts as to the current status of the ETF).
MJSA ANNOUNCES 15TH ANNUAL AMERICAN VISION AWARDS DESIGN COMPETITION
Providence, RI-Manufacturing Jewelers and Suppliers of America (MJSA) is pleased to announce its 15th annual American Vision Awards (AVA) design competition. Every year, the AVA design competition recognizes the talent and innovation of designers whose work is influencing the future design trends.
In addition to the overall Professional and Student Awards, distinction categories for 2006 include:
- Platinum Distinction, sponsored by Platinum Guild International.
- Crystal Distinction, sponsored by Swarovski North America.
- Silver Distinction, sponsored by Silver Users Association.
- Mokume-gane Distinction, sponsored by Reactive Metals Studio and Shining Wave Metals.
- Reactive Metals Distinction, sponsored by Reactive Metals Studio, Cabot Supermetals, and Perryman Company.
- CAD/CAM Distinction, sponsored by Gemvision.
Winners will be selected by expert jewelry designers and manufacturers, as well as editors of leading trade publications, based originality, creativity, presentation quality, effective use of materials, wearability, and the design's perceived manufacturing and marketing potential.
The AVAs will be presented on March 11 at Designer Day, a symposium at which designers share their inspiration and expertise. All winning designs will be displayed for thousands of buyers and exhibitors at Expo New York (March 12-14, 2006), the largest U.S. trade show dedicated to jewelry manufacturing.
Entries must be postmarked by October 30, 2005 (date may change). For submission guidelines and further information, please contact Marie Goncalves at 1-800-444-6572, ext. 3050, or e-mail marie@mjsainc.com. Updates are also posted at www.mjsainc.com. Take a moment to look at the Silver Distinction American Vision Awards Flyer
REPRESENTATIVE BOB GOODLATTE CHAIRS FIRST HOUSE HEARING ON EMINENT DOMAIN
Hearing Examines Potential Effect of Recent Supreme Court Ruling and the Potential of the "Strengthening The Ownership of Private Property" (STOPP) Act.
House Agriculture Committee Chairman Bob Goodlatte today chaired the first hearing in the House of Representatives on the potential effects of the U.S. Supreme Court's June 23rd decision in Kelo v. City of New London, the controversial ruling that appears to give local governments greater eminent domain power than many in Congress, and a growing number of Americans, believe they should have. A week after the Court's ruling the House, by a margin of ten to one, passed a motion disagreeing with the Court.
"Private ownership of property is vital to our freedom and our prosperity and is one of the most fundamental principles embedded in the U.S. Constitution. However, the Supreme Court's recent 5-4 decision in Kelo v. City of New London is a step in the opposite direction. This controversial ruling expands the ability of state and local governments to exercise eminent domain powers to seize property under the guise of 'economic development' when 'public use' is as incidental as generating tax revenues or creating jobs. By defining 'public use' so expansively, the court essentially erased any protection for private property as understood by the founders of our nation, leaving state and local governments with the ability to use eminent domain powers to take the property of any individual for nearly any reason," said Goodlatte.
The committee also analyzed the merits of H.R. 3405, the "Strengthening The Ownership of Private Property" (STOPP) Act of 2005, bipartisan legislation introduced by Representatives Henry Bonilla (R-TX), Stephanie Herseth (D-SD), Goodlatte, Collin Peterson (D-MN), the committee's ranking member, and a number of other House Members.
This legislation mandates that if a state or local government uses eminent domain for economic development and takes land from one private entity to give to another, then that state or locality will not be eligible to receive federal funding for any projects receiving federal economic development assistance.
"Chairman Goodlatte's leadership will be a key success point in this legislation. By securing early hearings and moving swiftly through the committee process, the chairman is helping ensure rapid implementation of our bill. I'm thankful for his support and look forward to the legislation's continued success," said Bonilla, chairman of the House Agriculture Appropriations Subcommittee.
"The Supreme Court decision in Kelo v. City of New London dealt a serious blow to the fundamental rights of property owners. In essence, the ruling means that governments can take your property and give it to someone else. I think this is a dangerous precedent that requires congressional action. In the short time since its introduction, the STOPP Act has garnered broad bipartisan support because it is necessary, common sense legislation," said Herseth.
"It is important for government at all levels to respect and protect private property rights from inappropriate seizure at the whim of local governments for purely economic reasons," said Peterson.
Under H.R. 3405, state and local governments would be subject to the Uniform Relocation Act, which provides fair market value and moving expenses for citizens relocated by abusive eminent domain proceedings.
"The nation's founders realized the fundamental importance of property rights when they codified the takings clause of the Fifth Amendment to the Constitution, which requires that private property shall not be taken unless for public use and with just compensation," said Goodlatte. "No one should have to live in fear of the government snatching up their home, farm, or business, and I am committed to ensuring that our rights are protected as the founders intended."
This measure was referred to five separate committees of jurisdiction: Agriculture, Education & the Workforce, Financial Services, Resources, and Transportation & Infrastructure.
REPRESENTATIVE BRADLEY INTRODUCES REMANUFACTURING TAX CREDIT BILL - DOES NOT INCLUDE SILVER
Earlier this year Representative Jeb Bradley (R-NH) introduced legislation that amends the Internal Revenue Code to allow a tax credit for investment in qualified reclamation property. Defines "qualified reclamation property" as tangible depreciable recycling or remanufacturing property with a useful life of at least five years. Limits the amount of such credit to 20 percent of the basis (not exceeding $10 million) of qualified reclamation property placed in service during a taxable year.
A key section of this bill is: `(A) QUALIFIED RECYCLING PROPERTY- The term `qualified recycling property' means equipment used exclusively to collect, distribute, or sort used ferrous or nonferrous metals. The term does not include equipment used to collect, distribute, or sort precious metals such as gold, silver , or platinum unless such use is coincidental to the collection, distribution, or sorting of other used ferrous or nonferrous metals.
This legislation does not include equipment used to collect precious metals such as silver. If this issue is important to you please contact Paul Miller at pmiller@mwcapitol.com.
About SUA
The Silver Users Association is a non-profit organization that was established in 1947 to represent the interests of companies that make, sell and distribute products and services in which silver is an essential component.
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