Silver Price Looking Bright & Shiny!

Although over the past ten years the supply through production and scrap of silver has increase by 26 percent, the demand has expanded by only 10 percent. But a good percentage of this production is irrecoverable through photographic paper and other industrial use.

Yet silver bullion inventories have fallen dramatically while silver investments are increasing steadily with a consequent silver price now looking bright as reflected in the steadily rising silver price.

Production will have to hurry to keep up with the increased demand

And another thing. It has been said by some academics and economists that silver is less valuable than gold, because it is bulkier than an equal value of gold and therefore costs more to handle and ship, making it less valuable than gold.

This is a fallacy of course

As Jason Hommel of correctly pointed out:

"Most of the cost to ship silver and gold, about 80% of the cost, is for the insurance, to insure against the loss of theft of it. And here's how it breaks down, as follows:
To ship 100 oz. gold, requires 4 packages, because you can only insure so much at one time, not more than $25,000 worth. $45 each package.
Total cost to ship 100 oz. of gold = $45 x 4 = $180
To compare, it costs $20 to ship 100 oz. silver; $8 for the one box, and $12 for the insurance. Insurance is much less, due to the lower value.

Gold is 9 times as expensive as silver to ship, on an ounce per ounce basis at current prices, and more inconvenient, due to having to break down the packaging into 4 boxes."

So The cost if shipping for silver is not as much as some would have you believe. In addition silver is used mostly in industry, photography and even food! It possesses some excellent and much demanded qualities:

Silver is an excellent reflector. Silver film is used on the backs of mirrors including those used in telescopes, microscopes, spacecraft and solar panels, as well as bathrooms!

Silver is an excellent conductor of heat Those silver ceramic lines fired into your car's rear window keep the window clear of frost and ice.

Silver is one of the best conductors of electricity. It is the metal of choice for switch contacts because it does not corrode.

Silver kills bacteria! Silver chemically affects the cell membranes of bacteria, causing them to break down.

And of course, silver captures images! Silver salts are the basic image capture and forming materials in photography. Every picture of your sweet little darling contains silver, as well as medical/dental x-rays and your favorite movie.

And don't forget the silver in your jewellery or traditional tableware. It's a favorite medium because it is soft and malleable, and can be shaped into any form. Silver has been used in cherished heirlooms and gifts for centuries.

Yes, the price of silver is indeed looking bright and shiny!

Silver Price Likely to Out Perform the Gold Price in 2008

According to Kotak Commodity Services Ltd (KCSL) silver is likely to outperform gold this year.

"We forecast an average gold price of $814 an ounce in 2008; while silver is more likely to average $17 an ounce," said KCSL in a report.

This would put silver in a higher ratio to gold than ever before (apart from some occasional spikes)

Over the last 7 years, gold and silver has grown at a CAGR (Compound Annual Growth Rate) of 14.41% and 17.34% respectively.

It has been considered that the silver price is likely to outperform gold price this year in line with the long-term declining trend of gold-silver ratio. This could mean that gold may witness a 17 per cent rise this year, whereas silver could increase by 27 per cent.

On Wednesday last (2nd January 2008) gold was up in Asian trade by $5 at $838.70 an ounce, while silver was up six cents at $14.85 an ounce. Last year, gold averaged $695.39, while silver was at $13.38.

This year, gold poses the downside risk and any upside surprise in the dollar would cap its rise. "Precisely for this, we are cautious." The report said, adding that the strategy should be commodity-specific. "Gold and silver should find a place in asset allocation. And for the traders, the strategy should be to time the market, while investors should accumulate these metals on any dips and correction." The report said.

Despite this it does not look likely the dollar will strengthen anytime soon and both are likely to rise. For some it is a matter of which will perform the best and silver is looking very promising to outperform gold in 2008.