The rise in the price of silver is nothing more than a sign that this precious metal will probably recover significantly from the silver swoon of about a quarter of a century ago, after Bunker Hunt failed to corner the world market in the precious metal.

The price fell at the time from $50 an ounce to low single-digit figures. Hunt was the Texas oilman who discovered Libya's oil after the great oil companies had signed reports that there was no oil there.

There has always been the glitter of precious metal in a place of worship, such as the massive silver lamp in front of the main altar in St John's Co-Cathedral, or the fabulous silver gates of the same church.

These are famous in the Maltese folk imagination as having been painted black to escape the plundering blasphemy of an arrogant Napoleon, on the path of world conquest.

The Maltese have always piled silver into their churches and homes, and now they stand to be handsomely rewarded. I am not saying that we will revert to the time when silver was a more highly priced commodity than gold. Nor am I saying that the world will soon be witnessing a repeat operation of Hunt's panoramic purchasing spree when Hatton Garden in London was filled with people selling their antique silver for scrap.

The bullion price had then become higher than the value of an antique silver tea set. $50 25 years ago represented a silver price about 80 per cent more than silver is fetching today. It is still massively undervalued. It has a long way to go if it were to reach its former dizzy heights.

The Arab oil lobby

The Arab oil lobby now again commands hundreds of billions of petrodollars, which not even the world's greatest moneymen know exactly how they are being invested.

The Arabs have learnt many lessons in international investment, since the time 20 years ago when the famous financial journalist and economist John Plender published his book The Square Mile.

This was a guide to the new City of London. He stated that Arab oil money in the Seventies was deposited in London banks and later invested in South America. This money was not even monitored. I may add, with tongue in cheek, that if it was not monitored, what guarantees were there that it was not plundered?

The Arab financial lobby is growing in strength and is obviously behind the new silver boom. Such booms seem to occur when the Arab world is flush with petrodollars. It happened in the late Seventies, after the second Iranian oil shock in 1979, and it is happening again today.

The conclusion of many is that the Arab oil lobby is again buying into precious metals, especially gold and silver.

It is prepared to learn from the mistakes it made last time when, overflowing with petrodollars, it had a chance to win a great position in world finance but lost it through the collapse of the over-motivated Hunt world silver cornering operation.

A new-found caution

The Arab lobby is no longer a babe in the woods, and is exercising caution on the use of its money, a lot of which is moving into equities on the world's stock exchanges. Many more young Arab men know economics than before.

The Economist has alleged, in a major article on Alan Greenspan's legacy, that there is an inflation in asset prices as distinguished from the old style inflation. This new phenomenon has a relation with the expected dramatic rise in the price of silver.

This advanced 56 per cent over the past 12 months, and 29.8 per cent in the last week of January alone. There is evidence that the rise of the price of silver is accelerating, but there is hardly a probability that the scenarios of 1980 will be repeated, unless another Bunker Hunt is found, fortified with Texas and Libyan oil money. This element in the silver boom of 25 years ago must never be lost sight of.

The new boom

Silver swooned and for two decades lived in a near coma. It is now showing evidence of a new boom closely allied to the advances of the increased use of silver for technological reasons.

It is not only man's long known almost religious lust for silver that is putting up prices, but also the movement of the world's money into commodities, which since the summer of 2003 has been the big new theme in the globalised world economy.

It was forecast by more than one economist writing in the Financial Times that the next five to ten years would reverse the downward trend in commodity prices of the past 20. Silver fits into these predictions like a glove.

It did not immediately follow gold in its dramatic rise since equities started to fall at the end of 2000. But now it seems to be in the process of making up for its past lethargy in waking up from its swoon.

Silver resplendent

The time has come again when silver will be resplendent not only to enhance attitudes of worship to the almighty, but also as an object of trade in a stockbroker's office. Many wise families in Malta, rich or poor, think it is better to spend money on affordable silver than on alcohol and tobacco.

They have been doing it since the time of the Knights, who established a firm footing in the silver trade by organising an assay office in the Monte di Pietà in Valletta.

Malta's knightly silver has an international currency. It is to be found for sale, as a foremost prized article, at the famous Via Condotti in Rome just in front of Palazzo Malta, in a shop specialising in Italian antique silver.

This is not to mention the Silver Vaults in London, when prominent Maltese silver collectors are known on a first name basis. The probable coming silver boom will make antique silver a more interesting article at our well attended auctions, but it will not have a proportionate effect on its price.

During the last silver boom the price of antique silver did go up but not in proportion to that of its bullion price. In fact in most cases the value of the bullion surpassed the antique mark-up price of many a not so antique tea set.

All Maltese have an interest in the price of silver, for the fabulous silver collection in the Museum of Fine Arts and the silver in the Mdina Museum and St John's Co-Cathedral belongs to us and our children. Let us take care of it and provide for its security.

Nobody should miss the following paragraph, published in the Financial Times on January 28: "Silver set the pace for commodity markets this week, reaching a 22-year high of $9.76 a troy ounce yesterday, on hopes a new exchange traded fund (ETF) would attract significant investor interest. Barclays Global Investors is awaiting US regulatory approval for a silver ETF and this generated higher trading volumes."

johnazzopardivella@hotmail.com

This is not investment advice but cultural background for the building of an investment decision. John Azzopardi Vella has promoted the Malta Development Fund and advised S&P. At present he is an executive manager with DBR Investments Limited, licensed by the MFSA.