Silver price may remain firm in 2008 on rising investment demand as most investors are forecast to remain buyers next year.
Average silver price in 2007 has gained by 16% on 2006?s average price on rising investment demand, increased industrial off-take amid 2% rise in fabrication demand. Investment demand in 2006 has been the chief cause of the strength of the price.The white metal rose to peaks of well above $15.50 in last November.
In 2007, investment has again featured solidly on the demand side of the equation and has been the essential driver of the rise in the silver price to an expected annual average of around $13.40 this year, which would represent a gain of 16% on 2006?s average, according to latest report released by London-based GFMS quarterly review.
?Rising investment next year should be more than enough to offset the headwinds from higher mine production and an expected fall in fabrication demand. As a result, the average silver price is forecast to advance further in 2008 and to trade within an approximately $13-$17 range,? Sierra Highcloud, Metals Analyst, GFMS said.
GFMS expects fabrication demand to rise by around 2% this year, with silver?s substantial price increase since early 2000 having relatively little impact on this component of demand. Industrial demand is currently forecast to expand by over 6% in 2007. Its core component of electrical and electronics end-uses has performed particularly strongly.
Mine production is forecast to rise marginally in 2007, while scrap should record a small loss, despite silver?s price run up. Government sales are forecast to fall sharply, possibly by as much as 50% year-on-year. This is the result of markedly lower sales from China and the absence of Indian government disposals this year Scrap supply is expected to decline this year due to a reduction in the quantity of silver recovered from photographic waste as this area of demand continues to fall.