Buffett Turning Silver Into Batteries?
Warren Buffett’s purchase of 20% of the world’s silver may anticipate a new use for the metal in fuel cells, according to an upcoming report by an industry consultant.
“Scientists are racing to develop the next generation of fuel-cell batteries used to power electric cars, laptop computers, cellular phones, submarines and satellites, and one of the most promising is silver-zinc fuel cells,” said Richard Siegel, managing partner at Chilport Proprietary Research, which is set to publish a report called “Buffett’s Silver Lining” on April 6.
On Feb. 3, billionaire Buffett said that his company, Berkshire Hathaway, had bought 129.7 million ounces of silver between July 25, 1997, and Jan. 12 of this year.
Buffett said then that he and his partner, Charles Munger, had concluded that “equilibrium between supply and demand was only likely to be established by a somewhat higher price.”
Spot silver bullion prices jumped to nine-year highs of $7.90 an ounce after news of Buffett’s purchase, before falling back to about $5.63 an ounce.
At New York’s Commodities Exchange, silver for May delivery ended up 24.5 cents to close at $6.135 an ounce.
“We first started to look at this story,” Siegel said, “when Mr. Buffett was compelled to reveal his substantial investment in silver a month prior to releasing the much-anticipated Berkshire Hathaway annual report March 14.
“The key question to us was, was he buying based on low supply or high demand? The fact that he took physical delivery of silver swayed us toward demand,” Siegel said.
Because Buffett is a major shareholder in Gillette Co., the parent company of Duracell, Siegel said his firm focused on batteries. And since Berkshire indicated it planned to hold its silver, that “pointed us toward emerging silver-use technologies, rather than established ones like photography,” Siegel said in a statement.
Silver-zinc fuel cells fit the investor profile of Warren Buffett “like a batter’s glove,” Siegel said.
High-energy silver-zinc batteries are already used in the U.S. Navy’s deep-sea rescue vehicle and on the Mars Pathfinder. Silver is also being used in batteries to power electric- and solar-powered cars.
