Silver's Smart Run to Continue in 2010

Source: Commodity Online  (12/21/09)

". . .silver's shining story will continue in the coming year also."


Until now, market analysts have been going ga-ga over the rise and rise of gold prices; but silver has been shining better than gold in 2009 and this trend is set to continue in 2010.

Driven by demand from auto sector for silver-zinc batteries which are used in 'smart automobiles' and an array of portable electronic devices, silver's shining story will continue in the coming year also.

Demand for silver in the coming year is expected to rebound to normal levels in 2010 as the emergence of key new markets for silver would help to boost prices further.

Also, restocking of inventories for more of silver's traditional uses will be a powerful demand driver in the near term.

Silver prices are mainly driven by the fact that traditional industrial end-users of silver, such as the global electronics industry, have in recent weeks begun to replenish severely depleted inventories.

During the financial crisis, silver inventories had run down sharply and it may take approximately six months to fully rebuild the inventories to normal levels.

An important factor to understand in the case of silver is that demand from the industrial sector tends to be quite inelastic. This means that buyers have few options and have to pay at prevailing prices.