Silver demand grows in industrial sector

Seasonality in silver is influenced by an increase in industrial demand during its period of seasonal strength. Approximately 40 per cent of silver is used industrially in solar batteries, water purification systems, cellphones, circuit boards, plasma televisions and radio frequency identification devices (RFIDs).

Growth in excess of 10 percent per year is expected to continue in these sectors. The demand for silver for photography purposes continues, but at a diminished level. Demand for jewelry continues to increase at a slow rate with growing discretionary income despite the higher price of silver.

Demand for jewelry has been notably stronger in countries such as China and India. Demand for silver is expected to exceed supply in early 2012 because of an unusual non-recurring event. Thailand is expected to recover from a major flood experienced in the fourth quarter. Thailand is the world’s largest assembler of electronic devices. Many of its electronic assembly plants were shut down by the flood. Demand for silver used in electronic components slipped briefly, but is expected to recover early this year.

Silver bounced from intermediate support at $26.15 last Thursday and recovered to $29.17 Wednesday. Short-term momentum indicators including stochastics, relative strength index and moving average convergence divergence are deeply oversold and turned positive Wednesday.

A wide variety of investment opportunities are available in the sector. Best known and most actively traded security is the iShares Silver Trust. Sprott Asset Management offers its Physical Silver Trust. Global X offers the Global X Silver Miners ETF, an ETF that holds a diversified basket of 25 silver producer stocks. Holdings include Pan American Silver, Silver Wheaton, Hecla Mining, First Majestic Silver Corp. and Silver Standard Resources.

Bull and Bear ETFs that offer two times the daily change in the price of silver also are available in U.S. and Canadian dollars. Horizons also offers the Horizons COMEX Silver ETF, a unit based on COMEX futures contracts that trades in Canadian dollars and is hedged against U.S. dollar fluctuations.

Courtesy:Theglobeandmail

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Posted by Silver Guru on Jan 8 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