Silver demand to rise 3-5 pc in 2012: Gold Field Mineral Services

Silver sales for industrial applications as well as for jewelry, coins, silverware and photography should climb 3 to 5 percent this year as end-users replenish inventories that ran low late last year due to an economic slowdown, said the head ofThomson Reuters GFMS, a respected metals research firm.

However, the metal’s price may not test all time highs as investor buying may remain subdued and the industry struggles to absorb a substantial surplus in the market, said Philip Klapwijk, global head of analytics of the London-based firm.

“In order for us to see prices to be sustained above the $30 an ounce level, we have to see a decent level of investment interest. Investors have to be willing to buy the surplus for the price to be maintained or move higher,” Klapwijk told Reuters ahead of the release of the World Silver Survey.

“What we have seen year to date is reduced appetite from investors, which have led to silver prices not really repeating the performance that we saw last year,” he said.

Klapwijk said silver’s price could push toward $40 in the second half of 2012, but he did not expect it to rise to a record near $50. It traded at around $31.60 an ounce on Wednesday.

Year to date, silver prices are up 13 percent after a 10 percent loss in 2011 had snapped two years of sharp gains. It hit a record of $49.51 an ounce in April 2011, followed by a more than 30 percent correction within the next week.

Hedge funds have largely liquidated their sizable bullish bets on silver and their enthusiasm for the metal has waned compared with last year before prices collapsed, Klapwijk said.

“It may re-ignite again if silver were to drop below $30, you can start to see the value-type investors coming in,” he said.

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Posted by Silver Guru on Apr 19 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