Investors Expected To Continue Absorbing Silver

Frankfurt-Germany (Dec 26)  Investment demand will remain a key factor for the silver market in 2014, as there will likely be little slowdown in buyers’ appetite for the metal.

Industrial demand should pick up as the global economy grows, particularly in the U.S., although how much this will affect silver is up for debate. However, continued growth in mine supply and a lackluster outlook for gold will keep silver tethered.\

Most bank analysts see average silver prices rising next year, with a range of $19 to $23.

In spite of good investment demand for silver, prices were in a bear market this year, down 35% as of mid-December, earning it the dubious distinction of being the worst-performing commodity futures market for 2014. If that holds, this would be the worst performance for silver in more than 30 years, Commerzbank said.

Soft industrial demand, which accounts for half of silver’s usage, contributed to the weak silver prices, the bank said, citing research by Thomson Reuters GFMS

Low prices didn’t stop investors from keeping silver in their portfolios. The largest silver exchange-traded fund, iShares Silver Trust (SLV), as of Dec. 17 has 10,139.78 metric tons of silver, slightly more than what it had to start the year, 10,084.96 tons, and not far off the high set on Jan 16 of 10,734.99. By contrast, holdings in the largest gold ETF, the SPDR Gold Shares (GLD) are down nearly 40%.