Below production cost, silver was a value play, too.
   Shareholder: I've heard you talk about commodities -- which don't quite fit into a balance sheet scenario. And you've talked about silver in the past. I was just wondering if you could give us an update.

   Cundill: The silver position has been a long one for us. I think we bought our first position about $4 U.S.... We had a very low cost. And we've seen it go up to $6.50 and then down to about $5.35.
   The rationale for our silver purchase was that it was analogous to buying a $1 bill for 50¢. We felt then -- and still do, although not quite as strongly -- that at $4.40, essentially, silver was trading below its cost of production.
   I always thought the cost of production was around $6.50. But there have been a couple of U.S. mines that have gone back into production at $5.35 -- Sunshine and Hecla, I think. One of them [Sunshine] may also have its own refinery. So its cost equation may be a little different.

Demand has exceeded supply for five or more years now.
   Cundill: Another characteristic of silver has been that the demand for silver, unlike gold, has been exceeding supply for five years now anyway. Some mines have gone out of business. And new mines have begun to produce. Essentially, silver is a by-product. And the supply-demand characteristic seems to be very much in our favor.

   Cundill: I'm surprised silver hasn't been doing better -- [especially since] you're not paying anything for the hedge against inflation. Barton Biggs is quoted in The Wall Street Journal about buying gold as an inflation hedge. But I'm inclined to think you're not paying anything for the hedge with silver. Because of the industrial dynamics, you get it for nothing.
   It's unusual. But we take the stance that, in fact, it is a $1 bill for 50¢. We haven't done anything [in it recently]. I think silver is around $5.42 U.S. But if it got below $5, then we'd probably add to our position.

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