Silver demand is still high

Analysis: From film to forks, scrap silver rush strains refiners

(Reuters) - In a small Ohio town Bill LeRoy is running his plant around the clock and still can't keep up. While much of industrial America is still struggling to emerge from recession, LeRoy's waiting list has doubled in six months and he's turning away customers.

The frenzy at his company, Ohio Precious Metals LLC, is a reflection of the explosive rally in silver prices. One of four major U.S. silver refiners and among only 50 worldwide, the firm is racing to process scrap silver flooding the market.

From consumers unloading flatware uncovered in dusty attics to industrial dealers in photographic solution and film, a 120 percent surge in silver prices over the past eight months is fueling a rush to sell every last scrap of silver.

Eventually, as LeRoy and others expand their capacity, the recycling of record sums of silver scrap may help contain a rally that has rivaled the massive Hunt Brothers price squeeze of 1980, when merchants recall being overwhelmed with people looking to sell their old flatware or unloved wedding gifts.

Until then, however, LeRoy's refinery in Jackson, Ohio about 100 miles east of Cincinnati is part of the problem -- the bottleneck in processing scrap is contributing to the tightest spot market supplies in decades. Investors and speculators are stockpiling a growing share of global supply via new silver exchange-traded funds and bullion coins.