The silver price, which at £11.205 (US$18.76) is less than half of its high of $48 an ounce set in 2011, could be set for a rebound according to industry players.
A research report out today from ETF Securities, a London-based investment firm focused on exchange-traded funds and commodities, argues that with industrial demand increasing, supply falling and inventories declining, the gold price stable and price volatility at a decade low, conditions are building for a silver price rally.
The report also cites the fact that in the first quarter of 2014 Chinese demand showed a 22% year-on-year increase in silver imports, the largest quarterly gain since the second quarter of 2010. In addition, demand from China was up 17% year-on-year.
Silver fabrication demand in 2013 increased the most since 2000, rising 6.3% to 866m ounces, led by jewellery, silverware and solar. Mining supply was only 741m ounces, which therefore meant recycling and inventory depletion were necessary to meet this demand.
The ETF Securities report states: “ In our view, the longer-term demand trend is likely to accelerate, based notably on global per capita income and GDP growth, rapid electronization and more recent investment trends in silver.” It expects fabrication demand to increase by about 3% in 2014.
In a recent interview with Every Investor, global investor Jim Rogers also highlighted the attractiveness of silver, when he said: “ I do own silver. If I had to buy one, gold or silver today I would probably buy silver, only because it is down more on an historic basis. Silver is down 60% from its all-time high, gold is down much less.”
Ian Williams, co-fund manager of the WAY Charteris Gold & Precious Metals Fund has also told Every Investor that he believes silver will hit $100-150 an ounce within 2-3 years.