22 Nov 2011

Silver to Surpass $50 in 2012

This past Wednesday night, experts met at the Silver Institute in New York City and speculated on the silver's forecast for the rest of this year through the end of next year. Bullish predictions ensued.

Yesterday's sharp price dip may be attributed to the fact that the SGE "announced an immient margin hike" overnight.

From Reuters:

"The Shanghai Gold Exchange said it will raise margins on silver forwards to 18 percent from 15 percent from Monday if the silver contract hits its daily trade limit on settlement on Friday. The exchange said it would lift daily trade limits on silver forward contracts to 15 percent from 12 percent if the contract hits limit up or down on settlement on Friday."

Philip Klapwijk of Thomson Reuters suggested that the average silver price-per-ounce this year will run around $35.66. His short-term forecast through the end of 2011 is $35-$40 per ounce. And for 2012, Klapwijk anticipates prices surpassing the $50-per-ounce range by the conclusion of 2012.

According to Klapwijk's observation and research, overall market and economic conditions in the coming year will push-up growth and demand in the silver market.

Due to the financial outlook, silver investors' interest is set to remain strong, even “in spite of two major sell-offs.”

However, as mine production of silver continues to grow, it could be a negative development for the silver price outlook.

Klapwijk forecast a "large and growing fundamental market surplus" of silver of +/-230 million ounces this year.

Although silver's core fabrication demand (excluding coins) should rise next year, largely due to gains in industrial consumption, "it will nonetheless be exceeded by gains in production and recycling." However the substantial silver market surplus should be absorbed by silver investors, Thomson Reuters GFMS suggested.

Additionally, Thomson Reuters data reveals that silver coin minting could rise by 25% this year! This would be an all-time-record high for the Thomson Reuters GFMS data series.

But watch out for fake silver and gold jewelry this year...Thomson Reuters says the expect jewelry fabrication to increase a bit this year due to “substitution-led gains at the expense of gold.” On the other hand, they “anticipate further declines in jewelry fabrication silver demand” for the following year.

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