While silver has been a high beta (highly volatile) commodity, it will continue to give good returns even next year.
The average price of silver could rise to $45 an ounce in 2012, from $35.66 this year, as investment demand is expected to support it, said metals consultancy GFMS, a unit of Thomson Reuters, in its interim silver market review released on Thursday.
GFMS said investment demand could take the white metal higher than $50 by the end of 2012. In April this year, silver did flirt with that level but fell sharply after that. In 2011, on a year-on-year basis, silver gave 77 per cent returns.
“The main driver of the price remains investment demand, which has absorbed the substantial market surplus that characterised the silver market in 2011,” GFMS said.
World investment demand for silver, including coins and metals, is expected to reach 278 million ounces this year, the second highest volume after 2010. Further gains are expected for 2012, it added.
Global fabrication demand for silver is forecast to grow four per cent in 2011, supported by rising industrial demand, despite weaker global economic backdrop, it said.
Investment demand, too, is estimated to increase four per cent during the current year. Factors limiting price rise in silver would be an increase in mine supply, expected to rise four per cent in 2011 and to maintain its upward trend in 2012 as well, the report said.
Scrap sale is also expected to go up 10 per cent this year due to supplies from industrial and jewellery sectors and photographic waste will add to it.
