(TIMES) - BARCLAYS Global Investors (BGI), the British investment firm, insisted yesterday that it would go ahead with a new fund targeting US speculators in the $60 billion (£34 billion) a day silver market, despite a second day of tumultuous losses which have wiped more than one fifth off the value of the precious metal in the last two days.

A spokeswoman said the company was committed to launching the fund, despite the rout in the metals markets.

Silver tumbled to $11.60 an ounce in early morning dealings in London, after hitting a 23-year high of $14.68 on Thursday. Dealers pushed the price to within a sliver of $15 an ounce on Thursday morning, partly on hopes that BGI would buy huge supplies of silver bullion to back the launch of the new fund.

The spokeswoman declined to say when the vehicle will be launched, citing confidential talks with regulators in the US, where the security will mainly be marketed.

However, she insisted that volatility in silver prices would not deter BGI from proceeding with the product: “The launch of our silver-based investment fund does not hinge on recent market conditions . . . We originally filed the product with US regulators in May 2005. There are a number of regulatory hoops that we still have to go through but that is not contingent on prevailing markets.”

The precious metal recovered some poise yesterday, after initially extending Thursday’s losses to more than 20 per cent as speculators who had gambled that silver would punch its way through $15 an ounce cut their losses in the wake of profit-taking by longer-term investors.

One dealer told The Times: “People are still digging out from yesterday’s fallout. Frankly, we never thought we would end the week at anything below $15 an ounce. Given that we’re now looking at the $12.60 level, I think it’s fair to say that some people are going to have a pretty bad weekend.”

Taso Anastasiou, a technical analyst at UBS, the Swiss investment bank, poured further gloom on the outlook, warning clients that silver prices were still prone to further sell-offs: “Short-term, you could look for a move down towards about $11.30 and potentially down to the $10.39-$10.40 level.”

However, rivals urged that it was too soon to call an end to a remarkable bull run that has seen the price of silver rise by more than 68 per cent this year alone. Karen Jones, an analyst at Commerzbank, suggested that prices might start edging forward again after a period of stabilisation: “Even though we have seen such an agressive sell-off, we haven’t damaged the underlying bull market.”

VERSATILE ASSET

• Sterling silver is used for jewellery and silverware, where appearance is paramount. This alloy contains 92.5% silver, the remainder is copper or another metal
• Silver nitrate and silver bromide are used for traditional photography but not for digital
• Silver is is also used in dental alloys, solder and electrical contacts; for high capacity silver-zinc and silver-cadmium batteries
• Silver can be used to back mirrors because it is the best known reflector of light, but tends to corrode
• Silver paints are used in making printed circuits
• Medallions and commemorative coins often employ silver but the metal is rarely used for traditional coinage: it is far too expensive to make practically sized coins and wears faster than nickel

There is no mystery to gold ownership; people have traded in gold for thousands of years. If you would like to know how to purchase Gold, what to purchase and who to purchase it from, please email barry@coinmag.com.