Silver started catching the attention of investors over the past two and half years ever since it started showing a meteoric rise as an asset. It plummeted to 10 per ounce in 2008, rebounded to about $31 at the close of 2010, and has maintained it's upswing in the first quarter by reaching $39. June futures 1 per ounce. At a time when tension in muddle east and other geo-political issues have lead to depreciation in the value of US dollar, this has caught the attention of investors. It fails to match the appreciation and shine shown by silver over the past two and a half years, but the other bullion-gold continues to move upward. On that note, what are some of the silver price estimates for this year? To study both sides of the investments, let's look at both sides of the freshly minted coin.
Listed here are those things that have not only affected the demand and supply in the market but also crucially played in the increased demand for silver during the last few years.
Silver is widely used - it's in mobile phones, netbooks and even systems designed for filtering water. This has a huge impact in the Current silver prices. From 2000 to 2008 industrial use of silver rose close to 20%. Almost half of all silver demand was industrial by 2008. The precious metal is largely consumed and almost never returned to the market for sale again. This is why the use of silver always creates strong demand. Technological demand for silver is increasing, in effect.
2. Investors.
From nearly six million ounces in 2003, "The Silver Institute" claims that investor demand has climbed to 140 million ounces in just seven years. New silver ETF's along with silver investors are buying bullion for their vaults (exchange-traded funds) the silver market is booming.
3. Production Costs.
The cost of mining goes up as input costs such as oil increases while companies are trying to increase production and start up new mines, this is knows a productions costs. Silver is no longer found in abundance. Maintaining higher prices is the added cost of mining.
Historically, the prices of gold and silver have correlated and experts in bullion analysis says this shows that prices could rise further. The ratio is currently around 37 if you divide the price of gold by the price of silver. The price of silver could rise to as much as $100 per ounce.. 150% from its current levels is where the possibility for the price of silver is at.
5. Rise in demand.
The demand is still increasing. As many dollars of silver as dollars of gold were minted by the US Mint in the months of January and February. The Chinese import of silver has increased to 112 million ounces from 100 million ounces, which is a shift of almost 20% in a market where the total demand is 800 million ounces.
6. More circulation of Money.
As the US Federal Reserve and central banks around the world continue to deal with fiscal issues through monetary means, more and more paper currency hits the global marketplace. With silver being one of those goods as a result more money is chasing fewer goods. The US dollar has lost 95% of its value over the last 100 years, since the Federal Reserve was established. Investors will have to seek out investments that won't lose value, unlike the US dollar which is depreciating and will continue to do so as part of a 100 year long-term trend, caused by the Fed's policies that remain unchanged since the twentieth century. A safer alternative would be precious metals such as gold or silver.
7. Crisis.
The high cost of precious metals is due in large part to the rise of the economy. This is not always the case, however is it at the time of 1990? The price of gold and silver barley moved at the period where inflation was anywhere from 1% to 6% annually. The investor demand was simply not there. During the 90 may be one of the reasons for this? A period of boom was experienced by the US. Sentiment changed in favor of safe assets like gold and silver after the technology crash and September 11th. Precious metals rise as boom times gave way to a recession. Passing more restrictive laws on everything from personal liberty to capital investment, mainly in the US they continued to rise as governments. The governments inability to deal with the ongoing crisis will be a driving force behind the rise of bullion, while inflation may play a part in the rise of precious metals.
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