CPM Group study projects rising silver prices

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CPM Group study projects rising silver prices

September 26, 2008

New York—The CPM Group has released the 2008 update to its Silver Long-term Outlook market study, which forecasts higher silver prices over the next decade due to increased supply coupled with strong investment and fabrication demand.

According to the update, which includes scenarios forecasted through 2017, investment demand is projected to remain the key factor in determining the price of silver over the next 10 years. Investors continuing to add silver to their portfolios are expected to keep silver prices more than 60 percent higher than the average silver price from 1950 through 2007 on an inflation-adjusted basis, and nearly four times higher than the average price over the past 57 years on a nominal-price basis.

Higher silver prices in turn are likely to influence the total supply of silver, the study says. Mine production is projected to rise at a rapid pace between 2008 and 2012 before slowing in the latter half of the forecast period. Several new mines are expected to open over the next decade, and several large primary silver producers are expected to ramp up their production.

Finally, demand for silver is projected to rise at a robust pace. Given the inelasticity of demand for silver in industrial applications, higher silver prices are not expected to reduce fabrication demand for the metal.

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