The Hindu Business Line : Silver prices surge 36 pc in 2004

A BOOM in investor activity, mainly driven by funds operating on futures exchanges and considerable buy side interest from high net-worth individuals resulted in a dramatic rise of 36 per cent in silver prices in 2004 culminating in an average $6.66 per ounce. Prices reached a 17-year high last year.

The price performance reflects fundamental changes in silver's supply-demand balance, World Silver Survey 2005, released by Silver Institute and GFMS Ltd, said. A fall in net government sales and higher industrial fabrication too contributed to the price surge.

Through the first four-and-a-half months of 2005, silver price is averaging $7/oz as a result of decline in scrap supply and decrease in government bullion sales.

Mine production in 2004 registered a four per cent (720 tonnes) rise to reach 19,731 tonnes with the world's four largest producers — Mexico, Peru, Australia and China — providing the bulk of the increase.

On the demand side, while total fabrication in 2004 fell by 2 per cent to a six-year low of 26,023 tonnes, industrial off-take rose by 5 per cent to11,419 tonnes with electronics spearheading the gains. Coin and medal off-take too gained 15 per cent to a 10-year high of 1,277 tonnes, the report pointed out.

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