Ardent Listener
16th November 2006, 20:46
NEW YORK, Nov 14 (Reuters) - Strong investor buying of silver, fueled by a popular exchange-traded fund, is likely to take the silver price 17 percent higher to $15 an ounce in the next few months despite lower fabrication demand, precious metals consultant GFMS said on Tuesday.
The London-based firm said in its half-yearly Interim 2006 Silver Market Review that demand from investors remained the main driver of silver and had raised silver to a "well-above-equilibrium" price level.
"GFMS expects significant price volatility but, over the next few months at the least a bias to the upside, with a spike to $15/ounce very possible," GFMS said in its report--compiled by GFMS for the Silver Institute, a trade group for silver miners, refiners and fabricators.
Spot silver <XAG=> traded at around $12.80 an ounce Tuesday afternoon. Between June and October, silver prices have gained almost 30 percent. Spot silver rose to trade around $15 in May, ignited by the launch of the iShares Silver Trust (SLV.A: Quote, Profile, Research), the first U.S. silver ETF.
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"There is a possibility that we will see more investor money going to the metal, particularly as gold has had a good run, and silver could also be quite a bit higher," GFMS Chairman Philip Klapwijk told Reuters.
But GFMS cautioned that as investors were building up stock through ETF, they might decide to liquate at some point, although the risk was moderated partly because of the ETF's broad ownership.
Also, slowdown in industrial demand and substantial rise in mine production growth might hurt silver prices in 2007, GFMS said.
Total fabrication demand -- which includes demand from industries, jewelry and silverware, and photography -- should fall by just over 3 percent for 2006, GFMS said. It noted that demand saw solid growth in 2005 despite the massive price increase.
GFMS's Klapwijk said a large part of silver fabrication demand is not very price sensitive in the short run. Continued...
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com: 20061114:MTFH66474_2006-11-14_23-30-06_N14304116&type=comktNews&rpc=44
The London-based firm said in its half-yearly Interim 2006 Silver Market Review that demand from investors remained the main driver of silver and had raised silver to a "well-above-equilibrium" price level.
"GFMS expects significant price volatility but, over the next few months at the least a bias to the upside, with a spike to $15/ounce very possible," GFMS said in its report--compiled by GFMS for the Silver Institute, a trade group for silver miners, refiners and fabricators.
Spot silver <XAG=> traded at around $12.80 an ounce Tuesday afternoon. Between June and October, silver prices have gained almost 30 percent. Spot silver rose to trade around $15 in May, ignited by the launch of the iShares Silver Trust (SLV.A: Quote, Profile, Research), the first U.S. silver ETF.
Game Console Wars
The video game industry's own clash of the titans reboots this week with the midnight launch of Sony's PlayStation 3 and Sunday's debut of Nintendo's Wii.
Full coverage
"There is a possibility that we will see more investor money going to the metal, particularly as gold has had a good run, and silver could also be quite a bit higher," GFMS Chairman Philip Klapwijk told Reuters.
But GFMS cautioned that as investors were building up stock through ETF, they might decide to liquate at some point, although the risk was moderated partly because of the ETF's broad ownership.
Also, slowdown in industrial demand and substantial rise in mine production growth might hurt silver prices in 2007, GFMS said.
Total fabrication demand -- which includes demand from industries, jewelry and silverware, and photography -- should fall by just over 3 percent for 2006, GFMS said. It noted that demand saw solid growth in 2005 despite the massive price increase.
GFMS's Klapwijk said a large part of silver fabrication demand is not very price sensitive in the short run. Continued...
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com: 20061114:MTFH66474_2006-11-14_23-30-06_N14304116&type=comktNews&rpc=44