Silver 2010: Rising Industrial Demand
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By Melissa Pistilli-Silver Investing News
Precious metals prices have continued their upward trend with gold flirting with $1200 an ounce and silver hinting it may reach $19 an ounce before the year is out.
Silver prices for 2009 have risen like a phoenix from the financial ashes mainly on the winds of strong investment demand. As 2010 approaches, some analysts are predicting this trend will end as the financial sector stabilizes and market fears abate. However, others are confident resurfacing industrial demand will pick up the slack and bring silver prices higher into 2010.
With price positive factors such as gold’s strong performance, the US dollar on the ropes, inflation fears continuing into 2010, and resurging industrial demand in Asian markets, silver is likely to breach the $20 level say some confident analysts.
Silver will no doubt continue to follow gold higher and investment demand for its yellow cousin shows no signs of abating in the short term. Recent purchases of gold by central banks in India, Russia and Sri Lanka along with the latest news from the United States’ largest depository HSBC, clearly indicate a thriving appetite for precious metals investment.
Reports are circulating that India may purchase additional gold on top of its recent 200 tonne acquisition from the International Monetary Fund. Bank of America Merrill Lynch, Societe Generale and Barclays Capital analysts have all predicted more central bank purchases in the future.
“Actions from central banks are very important at the moment,” said Commerzbank AG analyst Eugen Weinberg. “The purchase from India was like a seal of prices above $1,000 an ounce. Also, other central banks are buying gold.”
Adding further proof the record run on precious metals as safe-haven assets is likely to continue is HSBC’s recent announcement to its retail customers that they need to move their holdings from its Fifth Avenue depositary so HSBC can make room for bigger institutional clients.
2010 Price Forecasts
According to GFMS Ltd, silver will likely move past $20 an ounce in the short-term on strong investment demand. For 2009, the London-based firm pegs the annual average price at $14.78. Their Base Case scenario for 2010’s annual average price puts it slightly lower than 2009.
CPM Group is more bullish in the forecasts. CPM Group commodities analyst Chintan Parikh says growing industrial demand and continued investment demand should help silver push past its nearly $21 an ounce high from 2008 and may even bring it up to $25 an ounce.
Surging Industrial Demand
While industrial demand for 2009 is expected to be down about 20 per cent, GFMS expects industrial demand in 2010 to reach “normal levels” as markets recover and new markets emerge.
“Silver is a unique metal that wins whether the economy is going well or is in bad shape,” said Parikh. “In the latter, the investor buys it as a hedge against the downturn in the economy and the markets. And if the economy improves, then the industrial demand increases.”
GFMS research director Neil Meader says, “It is becoming an increasingly industrial metal and novel new uses will also likely assist the recovery in silver’s demand.”
New markets for industrial use include solar panels, biocides, medical equipment, LCD/plasma TVs, water purification, and silver-zinc batteries for use in small portable electronics to automobiles. Parikh believes the silver-zinc battery sector will be “one of the major drivers behind a rise in prices because it may absorb a lot of silver.”
He points out that electric cars are expected to really take off in China as it tries to diminish its foreign oil dependency and reduce fossil fuel pollution. By 2020, over half of the Chinese auto market is expected to be electric and hybrid plug-ins. While a lot of talk is centered on lithium-ion batteries, silver-zinc may prove a safer choice given concerns about overheating.
Tags: commodities, dollar, gold, inflation fears, investing, precious metals prices, silver, silver demand, silver inesting, silver market, silver prices
November 26th, 2009 at 8:37 am
Why in the are you quoting GFMS and other main stream sources? If you look back at their history you will find that they have been wrong 99% of the time. They are in fact, tools of the Fed and their ilk. They are the enemies of silver and you are legitimizing them. I will give you a little time to wake up and smell the coffee, before I drop you for blatant stupidity.
November 26th, 2009 at 9:13 am
Hey Dan,
The only blatant stupidity I see is you once again posting ridiculous threats. You must think you’re someone really special that I should care if YOU stop reading my posts.
Does it make you feel like a big man to threaten a woman and call her stupid for simply doing her job and reporting the news.
You insult our readers when you assume that they can’t make up their own minds about the information I present.
November 26th, 2009 at 10:23 am
This is Great! You GO Girl! I never see an author fight back! I’m a silverbug too! I see alot of creeps like Dan on posts & think that if you can’t flow with the real world, they should get out of investing and check into a mental hospital. Invest in PM’s, be happy, cheers! -Todd
November 26th, 2009 at 10:56 am
Dan is the kind of idiot that gives precious metals investing a bad name in many circles. Conspiracy nuts like Dan ignore fundamentals and propagate asinine theories to whip up a frenzy that actually only serves to drive investors from silver and other PM’s. Many people are scared of by the baseless hype avoiding PM’s altogether because they don’t want to risk aligning their investment strategy or beliefs with anything that resembles the drivel that comes from people like Dan.
The same kind of idiots also believe that the president isn’t American, global warming is a lie and the sun revolves around the earth.
November 26th, 2009 at 12:13 pm
Yeah Dan is an idiot. He must have problems at home or something. I say keep up the good work Melissa. Thank you.
November 26th, 2009 at 10:47 pm
Hi
Industrial demand has to pick up sometime even in an inflationery event.As inflation increases more people will pile into metals. Its a win win for silver investers. Warren Buffet owns half a billion dollars worth of silver stored at Loyyds Bank in London which he purchased at $6.08 a troy ounce. Yet he does not owns any gold stocks why? Silver supply is the way to go.
Keep up the good work. Dan get a life.
November 27th, 2009 at 8:52 am
2nd Dan, first of all I want to thank you for being one of the many people contributing to the continuing price increases of my gold and silver.
However, obvioulsy you do not watch Fox News or you would know about ClimateGate. A hacker got into the emails exchanged between the top pro global warming scientists. Surprise, surprise, they have been exchanging techniques on how to cook the books because temps have embarassingly not been actually rising the last 8 years. They also discussed how to keep anti global warming scientists from having their findings published in the accepted journals, and were told to remember to delete all of these emails in case of a freedom of information request in the furure.
Nice guys!
I know, I know, I’m a nutjob and facts don’t matter if they come from Fox News, they’re biased. The NY Times has backed up the story if that helps to make the facts actually matter. I’m terribly sorry, but if you are in the least bit curious about learning more you will have to check with Fox News because the unbiased news channels have had 0 stories on the subject. It’s just not important enough to bump another “Sarah Palin is still stupid” story. After all, we’re only destroying our economy and spending 100’s of $billions on this “problem”, so nobody cares, it’s not a story.
Oh, Dan, were you aware that back when the earth’s temps were going up slightly the temps of the other planets were also going up? Yes, there’s this thing called the sun, and it has these pesky cycles that it goes through. Bummer, we need to shut down our economy and print another $trillion to stop it.
Bad sun, bad sun!
Oh, while were at it, lets print another $trillion to study how previous life forms caused at least 3 Ice Ages and the global warming in between each one. They had to do something, it obviouly was not natural. With enough $ and giving up just a few more of our freedoms, I’m sure our government can get to the bottom of this problem.
Keep up the good work Dan, my retirement is depending on you.