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Mumbai, Nov. 7 Investment demand will remain the key to silver’s price prospects over the next year. Silver prices are forecast to range between $13.20 and $16.50 an ounce over the next 12 months as investment is expected to drive silver higher. The metal could, however, under-perform gold. Robust industrial consumption has largely neutralised the drop in photography and smaller losses in jewellery, silverware and coins, while rise in mine production (4 per cent) is offset by lower government sales. These are highlights of the interim silver market review released by the precious metals consultancy GFMS.

On the supply side, importantly, mine production is forecast to increase by some 23 million ounces (Moz) that is 725 tonnes or 3.6 per cent this year. The outlook for 2008 is a 7 per cent rise in global mine production. Suggesting that government sales look to have fallen in 2007 the report said that the Indian sales programme has ended and there is little evidence of any Chinese official sales this year. The bulk of government sales in 2007 came from Russia. On the demand side, industrial demand has once again expanded strongly. GFMS has forecast a full year gain of over 5 per cent. The industrial category should account for some 54 per cent of total fabrication demand this year. Both electrical and electronic uses of silver continue to absorb more metal. The review, however, cautions that a cyclical downturn in industrial demand looks probable in 2008. For the first 10 months of 2007, the average silver price basis the London fixing was $13.16/oz, up 17 per cent year-on-year and 10 per cent on intra-year basis.

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