Average silver prices seen easing to an average $33.21 an ounce this year

Average silver prices meanwhile are seen easing to an average $33.21 an ounce this year from last year’s median price level of $34.99 an ounce, little changed from current levels.

Investors remain shy of the white metal, which is used in electronics manufacturing and jewellery, after prices slumped by a third in the five sessions after they hit record highs last spring.

“Silver’s violent price moves last year have undermined its investor appeal for the time being,” said UBSstrategist Edel Tully. “The market needs fresh catalysts to encourage more participation.”

“We still do not rule out another stab at $50 an ounce. Given our expectation for gold to make new highs in the coming year, we could very well see silver enjoying some spillover benefits. But for this to happen, silver needs to rebuild its investor base,” she added.

“With 50 per cent of overall demand accounted for by industrial applications, this could be a drag on silver’s performance.”

Silver’s appeal has been undermined by the decline in the photography sector, which 10 years ago accounted for around a quarter of demand.

By 2010, silver offtake by that industry had dropped 64 per cent in tonnage terms. Photography companyEastman Kodak filed for bankruptcy protection earlier this month after failing to embrace digital photography.

Silver mine supply has also hit record levels in recent years.

In 2013, the analysts polled see silver prices rising to $35 an ounce, up on their expectations for this year but still well below last year’s record high of $49.51 an ounce. – Reuters

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Posted by Silver Guru on Jan 27 2012. Filed under Silver Analysis. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry