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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (47852)	11/22/2009 10:14:16 AM
From: LoneClone	Read Replies (1) \| Respond to of 195238

Silver likely to reach $20/oz in short term - GFMS miningweekly.com By: Chanel Pringle 20th November 2009 JOHANNESBURG (miningweekly.com) - Silver prices would likely reach the $20/oz level in the short term, as surging investment drives prices higher, precious metals consultancy GFMS forecast on Friday. The silver price had averaged $14,06/oz for the first ten months of 2009, a 12% year-on-year decline. Investment demand, however, continues to be the main driver of the prices and has raised silver to "well above the equilibrium level" that would have prevailed in the absence of such investment, GFMS stated. The average silver price for the full year was expected to be about $14,78/oz. However, in terms of GFMS' base-case scenario the average price for 2010 would fall slightly below that achieved in 2009, as conditions become less supportive of investment demand during next year. The consultancy pointed out that investment demand had risen "considerably" in 2009, with demand for physical metal and exchange-traded funds (ETFs) dominating in the early part of the year, as a result of investors having seeked refuge in silver when fears over counterparty risk and the financial system had been rampant. Since September, there had also been a robust expansion in all investment arenas, with silver benefiting from gold's strength, the weakness of the US dollar, some investor concerns over higher inflation and a general growth in investors' interest in commodities amid a low-interest rate environment, it added. Silver ETF holdings had increased by 100-million ounces between January and October. Investment demand would likely exceed 207-million ounces this year, GFMS forecast. It expected silver's supply and demand fundamentals, excluding investment demand, to become more supportive in 2010, mainly as a result of a recovery in fabrication demand, which had "fallen steeply" by an estimated 11% year-on-year in 2009. Nevertheless, a shrinking surplus between supply from mine production and scrap and fabrication demand would have to be absorbed by investors, which were likely to be "less motivated" to purchase silver as the global economy gradually recovers, short-term interest rates rise and the US dollar stabilises, the consultancy said. SUPPLY AND DEMAND GFMS expected the total silver supply to be "virtually unchanged" year-on-year in 2009, with marginal growth in mine production being offset by lower supply from scrap and government sales. Mine production would rise by about 12-million ounces, or about 2% in 2009, while scrap supply would fall by about 4% this year as a result of an ongoing decline in the amount of silver recovered from photographic waste. Government sales had also dropped sharply in 2009, the consultancy added. Meanwhile, industrial demand was forecast to fall by about 20% in 2009, owing to the impact of the economic downturn on electrical and electronics demand. A rebound in offtake was, however, again expected in 2010, as the global gross domestic product and industrial production grows and stock is replenished, GFMS noted. Jewellery and silverware fabrication would increase by about 2% this year, with silver having benefited in a number of important jewellery markets as a substitution for gold. However, high silver prices and the weak economy had restrained growth. Silver demand for photographic use would fall by nearly 16% in 2009, as a result of the continued switch to digital technology. Coin minting was forecast to rise by about 19% in 2009.