For the most part of August, the silver price has been on the decline based on negative economic data and the financial troubles in Europe and America, except for silver market manipulation of course. This news has raised concerns that there will be less demand for industrial silver than previously expected.
Markets around the world are feeling the impact of this as inflation rates increase and curb economic growth. Silver was at $39.40 and this was .30 cents higher than the closing price a few days prior to this. Gold did fall almost $12 per ounce. Later on though, gold managed to turn around and close at $1767.20 per ounce and silver ended up at $40.02 per ounce.
As investors have shown a willingness to invest, the outlook on silver as an industrial metal has improved. This has helped to improve prices even though there were losses in gold which is traditionally a safe haven. Silver is attractive to investors as an industrial metal as well as a safe haven for investors who are wary of the dollar’s performance. Investors now have to have a medium and long term approach to investing in commodities.
Even though there is the possibility of another recession, investors remain optimistic that silver will win through in the long term. This is based on the presumption that there will be an increased demand for commodities in the energy and agricultural fields and it is expected that his will cause growth for the global economy.
Global growth is important if we are to pull through the current economic situation. This sentiment is shared by the Silver Institute and it is bullish in forecasting a thirty six percent increase in industrial demand for silver. In 2010, 487 million ounces were in circulation and it is envisaged that by 2015 this will increase to 666 million ounces. This will be courtesy of assistance from the Asian market.
Industrial demand for silver is being fuelled by emerging energy markets. In the past few years, most of the demand for silver has been by investment markets. In terms of industrial demand, the largest part of this market has been industrial applications and the demand has grown from 349.7 million ounces in 2001 to 487.4 million ounces in 2010. Presently, the demand for industrial silver is at 50 percent of the total demand for silver and within the next decade it is envisaged that this will grow by another 20 percent.
Silver is a good alloy, catalyst and lubricate and is the best option for conducting electricity, transferring heat and reflecting light. Silver has many properties that make it very popular in the industrial industry. This applies especially to the electronics and the electrical industries.
Silver has become a crucial raw material for solar energy applications. As there is a demand for green energy this bodes well for future demand for silver. Asia and America are both expected to grow considerably in the next number of years with regards to photovoltaic applications. It is anticipated that demand for silver for this application will almost double.