NEW YORK, May 11 (Reuters) – Investors bought 209.7 million ounces of silver last year, the second highest in history, and silver’s strong appeal as both a precious and industrial metal will lift demand further in 2010, according to an industry report issued Tuesday.
Uncertainties after the worst financial crisis since the Great Depression and a subsequent economic recovery boosted silver fabrication and investment demand in 2009, metals research firm CPM Group said in its Silver Yearbook 2010.
“Silver has definitely benefited strongly from the economic woes of the world,” Jeffrey Christian, managing director of CPM Group, told Reuters in an interview before the release of the report.
“Investors are looking at silver and saying: It’s a good buy because I can buy it as a safe haven like gold, and if the economy does get better, it’s an industrial play,” Christian said.
Investment buying in silver is expected to reach 213.9 million ounces in 2010, CPM Group said.
Total fabrication demand, which includes jewelry and silverware, photography, electronics and batteries, totaled 616.4 million ounces in 2009, and is expected to rise 2.4 percent to 631.2 million ounces this year.
Christian cited strong industrial demand from electronics and flat-screen display panels due to the global recovery.
Solar panels, which consume only a small amount of silver, could help drive silver fabrication demand because of their growing popularity amid calls to cut down on fossil fuel consumption, he said.
Mine production climbed 0.3 percent to 553.9 million ounces in 2009, and is expected to rise about 5 percent to 581.2 million ounces.
CPM Group said that Peru was the largest silver producer at 123.9 million ounces in 2009, followed by Mexico.
On price outlook, Christian said that silver could range between $15 and $21 an ounce for the rest of 2010, and he added that silver’s low at $14.63 in February “may well be the low of the year.”
However, he said that the metal, which is traditionally more volatile than gold, could still retreat if interest rates rise.
“My expectation is that Treasury rates will rise sharply. When that happens, depending on the economic environment, you can see investors walk away from silver as they have done in the past,” Christian said. (Reporting by Frank Tang; Editing by John Picinich)
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