Factbox: Silver hits 30-year highs

LONDON (BestGrowthStock) – Silver prices climbed to their highest in 30 years on Thursday at $24.90 an ounce, as a stellar rise in gold prices lifted interest in precious metals as a safe store of value amid volatility in other assets classes.

Concerns that government action to boost flagging growth in a number of major economies could undermine the value of leading paper currencies is boosting the appeal of hard assets like gold and silver.

Silver is currently bid at levels not seen since 1980, and is poised for further gains as the weight of investment flowing into precious metals increases.

Following are key facts on silver supply and demand.

INDUSTRIAL CONSUMPTION

* World fabrication demand for silver — which includes industrial applications, photography and jewelry consumption — fell 11.9 percent to 22,700 tons in 2009 as a global economic slowdown impacted industrial production.

* This still accounted for 82 percent of global demand, however. Industrial application accounted for nearly 40 percent of total demand, jewelry nearly 18 percent and photography just over 9 percent.

* Silver, an excellent thermal and electrical conductor, is used in electrical applications such as conductors, switches and fuses, as well as in photovoltaic cells, LEDs and sensors.

* The metal is also widely used in mirrors and glassware.

INVESTMENT

* Investment in silver-backed exchange traded funds, which issue securities backed by physical stocks of metal, has boomed this year. Holdings of the largest, New York’s iShares Silver Trust, have risen by more than 670 tons in 2010 so far, peaking at a record 10,163.2 tons on Thursday.

* Sales of silver one-ounce American Eagle coins by the U.S. Mint reached 25.48 million ounces in 2010 to end-September, up nearly 24 percent from the same period of the previous year.

* Implied net investment in gold accounted for just over 15 percent of total silver consumption in 2009, up from just 4 percent five years previously.

SUPPLY

* Silver mine supply rose 4 percent to 22,072 tons in 2009, a record high.

* Peru is the world’s biggest silver producer, with output of 123.9 million ounces last year, followed by Mexico with 104.7 million ounces, China with 89.1 ounces and Australia with 52.6 million ounces.

* Global average cash costs at primary silver mines in 2009 were $5.23 an ounce, up marginally from the year before.

* Sales of government stocks of silver fell to 426 tons last year, the lowest figure for net sales in a decade and around half the sales volume of the previous year.

FORECASTS

* Goldman Sachs, in a report dated October 14, forecast silver prices at $27.60 an ounce over 12 months, at $25.50 an ounce over six months and at $23.40 an ounce over three months.

* Morgan Stanley said in a note dated October 5 that it sees silver prices at $18.47 an ounce in 2010, rising to $20.23 in 2011 before easing back to $19.53 in 2012.

* Citigroup said in a report dated October 6 that it had raised its short- and medium-term silver forecasts to $25 an ounce from $20. “The new forecasts imply a fairly stable gold:silver ratio of 58,” it said.

* JPMorgan said in a report released on September 30 that it expects silver to average $18.52 in 2010, with the strongest price seen in the fourth quarter. Next year it sees silver at an average $19.20 an ounce.

* RBS Global Banking & Markets, a report released on October 8, said it expects silver prices to average $18.80 an ounce this year, rising to $21.25 an ounce in 2011. “We expect robust silver demand growth between 2010 and 2014 to gradually outstrip supply growth,” the bank said.

Source: The World Silver Survey 2010 (GFMS/The Silver Institute)

(Compiled by Jan Harvey; Editing by Sue Thomas)

Factbox: Silver hits 30-year highs