Rising industrial demand also has benefited Northwest silver producers — many of whom never quite recovered from the metal's collapse...

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Rising industrial demand also has benefited Northwest silver producers — many of whom never quite recovered from the metal’s collapse in the early 1980s.

Back then, silver was viewed largely as a hedge against inflation. While silver is still seen by some as a store of value — particularly given the weak U.S. dollar — today it is primarily an industrial metal: GFMS, a London-based precious-metals research firm, estimates that 43 percent of worldwide silver demand last year was for industrial applications, notably electronics.

Increases in industrial demand effectively have offset declines in silver’s traditional photography market, said Phillips Baker Jr., chief executive of Hecla Mining, based in Coeur d’Alene, Idaho, and the huge stockpiles built up years ago are finally dissipating.

“Silver crosses all sorts of lines, from jewelry to electronics to medical uses,” he said, noting that the cellphone on which he was speaking contained a radiation-blocking silver plate.

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Silver, which had mostly hovered around $5 an ounce since the late 1980s, took off in late 2003 and now trades above $7, its highest sustained level since 1987-88.

Hecla is spending $10 million to develop a new, 5,900-foot level of its fabled Lucky Friday mine in north Idaho’s Silver Valley. The new level should start producing in the second half of this year, Baker said; the mine, which produced 2 million ounces of silver last year, should double that by 2006.