Silver May Average $13.65 This Year on Demand, CPM Group Says
By Thomas Kutty Abraham March 22 (Bloomberg) -- Silver prices may average $13.65 an ounce this year because of growing investment demand and reduced supply of the metal from the central banks, New York-based researcher CPM Group said. Silver will probably trade in a range of $10 to $20 an ounce in the remaining nine months of this year, CPM Managing Director Jeffrey M. Christian told reporters in Mumbai today. Silver averaged $11.6 an ounce in 2006 and has gained 4.6 percent so far this year. Silver rose 0.3 percent to $13.41 an ounce at 11:16 a.m. in London. ``Silver could trade in a range of $10-$20 this year,'' Christian said. ``In one spike it could go up to $20 and come down to $10 in another. It is going to remain very volatile.'' Investor demand for silver may remain robust, while industrial demand may decline, Christian said. ``Silver is losing out in fabrication. But it's gaining in investment demand, jewelry and electronics hardware,'' he said. Silver's industrial uses include battery cathodes, switches in microwave ovens and televisions, and photovoltaic cells for generating solar energy. CPM Group expects silver supply to remain ``tight'' this year as central banks, including the Reserve Bank of India reduced sales of the metal from their reserves. Demand for silver has outstripped supply every year since 1996, according to the Silver Institute, an industry group. Mine production grew 3 percent to 641.6 million ounces in 2005, less than the 864.4 million ounces used, with the gap filled mostly by silver scrap. `Liquidity Going Down' ``Even though there was 170 million ounce of additional supplies early last year, prices went up sharply to $15 from $9,'' Christian said. ``That liquidity has been slowly going down.'' Silver prices could reach $20 an ounce if the exchange- traded fund created by Barclays Plc adds another 20 million ounces to its corpus of 120 million ounces, he said. Barclays' iShares Silver Trust has gained 3.5 percent this year. The Silver Users Association, whose members include Eastman Kodak Co., jewelry-maker Tiffany & Co. and Dow Chemical Co., opposed the creation of the Barclays fund last year because it may keep prices high. ``If they keep adding to the reserve, as there is a spurt in investor demand, you're going to see the market remain tight. In that case, $20 is nothing again,'' Christian said. To contact the reporter for this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net Last Updated: March 22, 2007 07:40 EDT
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