Net investor buying is expected to keep silver prices strong in 2008, although seasonal price weakness is anticipated during the second and third quarters this year, CPM Group said in its 2008 Silver Yearbook.
On silver outlook for 2008, the New York-based precious metals consultants predicted that higher silver prices are expected later this year and in beginning 2009.
Annual silver price volatility stood at 26.1% in 2007, down from 45% in the prior year.
The research report found that the sharp increase in the price of silver last year reflected strong investment demand from many parts of the world and from many types of investors.
They also found silver interesting because it has stronger fundamentals behind it. Investors were buying silver for all of the same reasons they were buying gold: As a safe haven during times of financial market distress, as an inflation hedge, as a hedge against a falling dollar, and more.
Total silver fabrication demand is projected to rise modestly by 2.2% to 740.2 million ounces in 2008. Demand for silver use in jewellery and silverware is projected to rise 4.6% to 273.5 million ounces this year.
In 2007, silver fabrication demand increased by 0.9% to 724 million ounces.
?While higher prices should be expected to restrain the growth of silver use in jewellery and other applications, the price effect may be relatively limited,? CPM report said.
In 2007, total silver supply was 784.8 million ounces of which 68% came from mine production, according to CPM report.
World mine production of silver increased 4.1% to a record 533.7 million ounces last year.
This year total supply is projected to increase to 815.1 million ounce, a 3.9% increase mostly attributable to a sharp increase in mine production. Total mine production is projected to be 557.4 million ounces, up 4.1% from last year.