4/25/10 Silver Demand As A Commodity Is Growing

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

Last year global silver demand hit 888 million ounces, while worldwide mining production totaled only 680 million ounces, thus creating a 208 million ounce deficit. Many people don’t know that silver is the most used commodity in industry next to oil. When you have a material that is the world’s best conductor of electricity, the best heat ransfer agent, the best reflector of light and the best biocide, it’s only natural that new uses for silver are constantly being found. As long as world GDP and population grows, silver industrial demand will grow.  But what’s really remarkable is the composition of silver demand.How many commodities can you name where its main demand engine was crushed and other new demands emerged to maintain and increase total demand?  None.  Yet silver lost its main demand sector in photography and still overall demand increased.  That’s incredible and shows just how versatile silver is as a vital industrial material. Industrial demand continues to pick up with new applications for silver coming to the market all the time, like silver zinc batteries. The silver zinc battery market alone is forecasted to be a large driver going forward for silver. If you are looking for more reasons, then how about Ten Thousand Reasons To Buy Silver, which goes into more detail about the numerous industrial applications that require silver. Yes, there are many of them from water filters and band-aids to electronics such as cell phones and RFID tags.

Silver investment demand is on the rise as well and perhaps may soon surpass that of industrial demand. Just like people are turning to gold in the great flight to quality, silver is also starting to attract demand from investors. One of the biggest wildcards in the mix is China. Until recently, the Chinese government did not allow its citizens to buy precious metals. They have done a complete reverse and now highly encourage all of their 1.3 billion citizens to buy, buy, buy. Don’t forget about their neighbors, you know, the other country that has a 1 billion plus people in it, India. The Indians have a long history and tradition of buying both gold and silver. I believe silver demand in India will increase as the price of gold rises.

I try to control my enthusiasm for future increases in Silver prices. I worry about being wrong, but I’m betting personally that Silver is still at the starting gate and will end up such high returns that people won’t believe Silver was available under $20 per ounce. Be patient. Be persistent. You will never regret it!

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