LONDON (Commodity Online): From 1989 to 2003, silver traded mostly between $4 and $6 per ounce until taking off on a big up-trend for almost five years. Post-9/11 was a good era for most commodities and silver did very well up until the financial panic of late-2008. Prices found support around $9 in late-2008 and may have found resistance in June at $16.

On July 6th, silver prices closed below the 125-day average, but they did not stay for long. The higher close on July 20th is an impressive sign of strength.

Until prices exploded higher in late-2003, it was hard to find anything positive to say about silver. The main changes have been the consolidation that has taken place in the gold and copper industries and the difficulty in developing new sources of production.

As much as 75% of silver's production comes from gold, copper, lead, and zinc mining which is why changes in these other industries have a large impact on the price of silver. On the demand side, silver (like most commodities) benefits from strong world growth and a weaker U.S. dollar.

According to an article in Barron's on June 8, 2009, the cash cost of producing silver is somewhere around $4.50 to $5.30 an ounce, but that rises to as much as $12 per ounce if exploration costs are included.

Fundamental data is hard to come by for the silver market, but the Silver Institute said that world mine production totalled 671 million ounces in 2007, up almost 4% from the previous year. 2007 fabrication demand totalled 844 million ounces, up 1% from the previous year.

Courtesy: dailyfutures.com