China's Demand for Silver Growing

A combination of uncertainty in the global economy, political unrest in the Middle East and North Africa, limited supplies and a growing demand from emerging markets could poise silver prices to break out to new highs. China, in particular, has been showing a large appetite for investments in both silver and gold.

“It has certainly been volatile, and it seems like there could be a potential shortage of silver in the offing. It touched $34 [an ounce], now you’re starting to hear more and more people say that $50 silver isn’t that far off and it’s not that far off because of things like emerging markets and demand for silver as a store of value,” said Chris Berry, founder of Mountain House Partners, who specializes in the commodity space and the evolving geopolitical relationship between emerging and developed economies.

China, which has historically been a net exporter of silver, imported a full 14 percent of global silver production in 2010. On top of a growing mineral stockpile, China’s foreign-exchange reserve – the largest in the world – holds some $2.5 trillion US.

“You have the Chinese sitting on a store of $2.5 trillion US of which they know is completely useless, so I think they are looking at gold, but also at silver as a store of value and a way to hedge against the decline of the US dollar,” said Berry in an interview with Silver Investing News.

Silver Market Outperforming Gold

Silver Prices Going Up

So far this year silver has outperformed gold, and that could continue on for some times, as silver is not only used as a hedge against inflation, but trades much more on supply and demand than its stronger cousin gold, which will keep silver prices going up.

With commodities certain to perform strongly in the years ahead, and silver possibly one of the potentially strongest performers among commodity metals, it future looks bright for investors in this area.

Those that understand commodities are starting to respond stronger in preparation for that, and one of those is the European-based ETF Securities, which has just created a new ETF focusing on silver.

"It's the first step in building a platform for commodities," said Graham Tuckwell, founder and chairman of ETF Securities.

This particular ETF will buy silver, and those investing in it will be buying into physical silver stored in a vault and stamped with a serial number.

Silver prices should continue to go up as demand outpaces supply, and new demand causes permanent usage of the metal which is unrecoverable.

Silver Prices Going Up

What Happens if Silver and Gold Price Ratio Returns to Historic Pattern?

It's an understatement to say gold and silver have been struggling lately, as the two metals continue to plunge, along with the worldwide economies.

What is fascinating about silver in particular, is the current ratio that is completely out of sync with its historic levels with gold.

The historical average ratio between the prices of gold and silver has been silver holding close to a 1/20 price of gold. At this time it is sitting at only a 1/75th price in relationship to gold's price.

What silver investors need to ask themselves is what happens if the price ratio between silver and gold reverts back to historic norms.

We can be sure some of that will come from the continual fall of the price of gold, but I don't think we can assume that in and of itself will bring back the ratio. I think we'll start to see the rise of silver prices again, and when that happens, there will be an abundance of opportunities to play the metal.

Once the forced liguidation of commodities unwinds itself, it's at that time we should look seriously at a surge in silver prices, which should drive up the prices of good silver mining companies ... and others as well.

The bottom line is we need to keep a close eye on the ratio of prices between silver and gold. They are far too out of sync at this time to remain there. When it changes, we need a plan in place to swoop in and profit from it.

Silver Drops as Investors Sell Precious Metals to Raise Cash

Investors desperate to get their hands on cash have been selling precious metals in order to gain some liguidity.

As a result, December silver fell by 10.6 percent, losing $1.275 to settle at $10.60 an ounce on the Nymex. It dropped even further in after hours trading.

Gold also plunged, settling at $859 on the Comex division of the NYMEX, as insitutional investors were looking for cash there as well.

Copper also fell significantly as it dropped 10.87 percent, 26.15 cents, to $2.1445 a pound.

Silver Wheaton Increases Profit 2 Percent for Quarter

Silver Wheaton CEO Peter Barnes

While Silver Wheaton (SLW.TO) experienced lowers sales volume than anticipated for the quarter, the higher price of metal allowed it to enjoy a 2 percent increase in profit for the second quarter.

The Canadian-based company ended with earnings of $23.3 million, in contrast to $22.9 million a year ago for the quarter ending June 30.

The company average a selling price of $17.35 an ounce for its silver sales, on the 2.9 million ounces it sold. The 2.9 million ounces sold was down by 13 percent from its projections. Last year they sold 3.1 million ounces during the same period.

According to Wheaton, the reason was the quality of the ore mined at Goldcorp's (G.TO) Luismin mine in Mexico, which was lower-grade ore.

CEO Peter Barnes noted in a press release that "This past quarter, we negotiated more silver stream agreements than any other quarter in our history.

"With eight silver agreements completed and another soon to be, we have diversified our portfolio and expanded our relationships within the industry."

Projections are for annual sales to reach somewhere between 13- to 15 million ounces sold in 2008.

Silver Conductive Inks Market Projected to Triple in 8 Years

Businesses have become interested in the silver conductive inks market again, as through the year 2015, the market is expected to triple reaching $2.4 billion, according to a NanoMarkets report, "Silver Inks and Pastes for Printable Electronics: 2008-2015."

During this period of time, the largest opportunity for silver inks demand "will be found in the RFID space where revenues from silver inks for RFID antennas alone will exceed $880 million by 2015. Based on the current excitement surrounding alternative energy, NanoMarkets expect the use of silver inks for solar panel contacts to grow to almost $250 million by 2015."

The obvious challenge in "the future of silver's use in electronics is undoubtedly its high cost. This is one reason that the traditional semiconductor industry has never seriously considered using silver for interconnects. Silver ink sales in the printable electronics business are also hurt by high prices. And with the price of silver almost doubling over the past year, this has really become an issue."

With silver prices seemingly on the way down, it's possible if it continues on that way it won't be much of an issue in about a year. That an assumption, and we really won't know until that happens. With gold expected to reach $1,000 again by the end of 2008, silver could ride on its coattails again.

If that happens, it could be a problem for projected silver demand.

Even so, the report projects that nanosilver inks will make up close to 21 percent of total ink sales in 2012. Most that will be because of the high conductivity of the metal, as well as it being able to be cured at low temperatures; an important part of the increasing role played by "thermally sensitive flexible substrates."