Silver to Gain 38 Percent in 2013, GFMS

A weaker U.S. dollar brought buying interest to gold from overseas as U.S. gold futures for December delivery gained $9.50 to $1,724.10 per troy ounce. The spot price of gold quoted up $10.50 to $1,724.75 per troy ounce. Silver for December delivery gained $0.32 to $32.69 per troy ounce.

Thomson Reuters GFMS has published research projecting the price of silver rising 38 percent from current levels in 2013.

Among the reasons cited for the price surge are continued sluggish global economic conditions, safe haven demands, loose monetary policy in the U.S., and fears over inflation.

Philip Klapwijk who is associated with the GFMS survey said a rebound in investment demand stemming from continuing loose monetary policies is expected to drive silver prices towards and possibly over $50 during 2013.

The spot price of silver has already gained more than 17 percent this year, surpassing gold’s 10 percent market gain.

Klapwijk also said strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates will lure buyers to the safety of silver.

He added his group is thinking prices will trend higher next year, though he is not convinced we will see $50 per troy ounce and $40 to $45 per troy ounce are more definitely prices.

Klapwijk, citing a much-underreported increase in Chinese silver demand, said Chinese jewelry demand for silver is growing at a double digit pace. On this fact, he projects the price of silver to trade between $30.90 and $36.00 for the remainder of the current year.

An increase in the silver supply coupled with higher silver mine output has hampered the silver price in 2012. Industrial fabrication demand for silver has fallen in Europe as cuts in solar power subsidies took effect, decreasing the demand from the manufacturers of photovoltaic cells. Additionally, silver mine production and output has increased 4 percent in the year, bringing more silver to market.

The GFMS survey and Klapwijk see demand picking up, however, particularly with a U.S. fiscal cliff crisis drawing a great deal of market attention and highlighting the economic uncertainty facing the U.S. post-election.

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