Silver prices should range from $33 to $47 per ounce and perhaps test a price of $50/oz, Phillip Klapwijk of Thomson Reuters GFMS advised Thursday.
During a conference call conducted Thursday under the auspices of the Silver Institute, Klapwijk forecast that silver prices may hit $36/oz this December and average $40-$42 per ounce next year.
As GFMS previously reported silver mine production is expected to rise by 33 million ounces or 4% this year, “driven by a strong project pipeline, high precious metals prices and a healthy performance by the base metals sector.”
“We estimate producer de-hedging of 10 million ounces during 2012 as producers continue to deliver into outstanding positions, faster than they are replaced,” said Klapwijk, global head of metal analytics for Thomson Reuters GFMS.
In their analysis, GFMS estimates that 43% of silver demand this year will be from industrial users, 30% for silver investments, 21% for the manufacturing of jewelry and silverware, 5% for photography, and one percent for producer de-hedging. This compares to 46% in silver industrial demand, 26% for silver investment demand, 22% for jewelry and silverware, and 6% for photography use in 2011.
GFMS forecasts that total fabrication demand will drop by 8% this year, while jewelry demand is set to post “modest growth in 2012 as healthy gains in emerging markets will more than offset losses in western countries.”
Coin demand is set to post a 24% decline this year, GFMS advises, dropping below 90 million ounces.
Meanwhile, Klapwijk noted silver ETF investment holdings totaled 623 million ounces as of Nov. 23, 2012, up from 47 million ounces in silver ETF investment from year-end 2011. Klapwijk also observed that more investment interest has been shown in the Comex silver futures market.
As for 2012 world silver supply, GFMS forecasts that 75% will come from mine production, 24% from silver scrap, and 1% from government silver sales. This compares to 73% of silver supply generated by mining, 25% coming from silver scrap, 1% from government silver sales, and 1% from producer hedging in 2011.
Klapwijk also disclosed mine production winners and losers in 2012 including top producers China, Mexico and Russia, and declining silver producers Turkey, the United States and Chile.
iPad Version – Picture: Silver bars are displayed at the Austrian Gold and Silver Separating Plant ‘Oegussa’ in Vienna: REUTERS/Lisi Niesner