Commodity Online
MUMBAI: Silver may not be as charming and glittering like gold. Though silver is treated like a poor man’s Gold in countries like India, the white metal continues to outpace the yellow metal in investment demand.

So what is driving the silver market world-wide? And where is silver production and demand heading for the year 2009?

Read some interesting factors from the World Silver Survey that drive silver market, and that help silver to out-beat gold often.

**The US The Mint's latest figures show that silver one ounce coins in the first four months of 2009 reached 9.7 million ounces against 5.8 million ounces in the first four months of 2008, and they remained high in the first half of May.

**Since the start of this year silver holdings in ETFs have continued to increase at a healthy rate, adding 2,121 tonnes to a total of 10,388 tonnes, which is equivalent to five months' industrial demand at last year's rates.

**Global silver fabrication demand declined by a minute 0/9% in 2008 to 25,897 tonnes. The largest fabrication drop continues to be recorded in photography, where the pace of decline actually accelerated, as further gains by digital solutions were compounded by the rapid deterioration in the global economy. Again surprisingly, in spite of silver prices rising by 12% in 2009, silver jewelry and silverware demand fell only a fraction. The modest scale of losses in both cases, owed much to healthy gains in India.

**China’s remains an importer of silver and a growing one as ‘official’ sales have now stopped and insufficient silver is produced locally to satisfy the huge urban growth programs and economic development there.

**The World Silver Survey highlighted a number of new uses for silver. The main growth areas in the last few years have largely been in health, electronics, and renewable energy sectors, all of which rely on the properties of the metal as a catalyst, biocide, and for storing or conducting electricity.

**Reported a sixth consecutive annual gain, increasing by under 3% to 21,179 tonnes [680.9 million ounces] and driven by strong production increases in Bolivia, Russia and Peru. Silver mined as a by-product of Gold mining increased 26% last year, while output from copper-silver mining declined by 7% or 11.8 million ounces.

**The World Silver Survey forecasts silver mine production to fall slightly in 2009, with output forecast to decline from all by-product sectors except gold. Declines are expected across most regions, with the exception of Latin America, where growth is forecast to continue. Growth is also expected to increase in Russia. It was estimated that net supply from above-ground silver stocks fell 14% to 4,718.51 tonnes [151.7 million ounces] in 2008, primarily due to lower net government sales and a modest drop in scrap supply. Last year's average price was $14.99 per ounce.

**The Survey notes a structural shift in investment preferences in India over recent years. Bars and coins have been taking increasing favor over the traditional high-carat jewelry. This is partly due to increasing consumer awareness of issues concerning under-carating in the jewelry industry; this was compounded last year by low local silver prices with bullion demand growing "exponentially" and GFMS estimates that it accounted for 53% of overall demand in the Indian silver market last year, surpassing the combined demand from jewelry, silverware and industrial uses.

*Silver fabrication contracted by just less than 1% and while this fall remains heavily concentrated in the photographic sector as a result of the relentless onslaught of digital technology, all other areas registered declines. Silver demand in photography, which twenty years ago accounted for more than 50% of silver industrial demand, has now dropped to just 12½% of off-take. Over the past ten years photographic usage of silver has dropped from almost 7,100 tonnes to just less than 3,300 tonnes, a fall of 54%, or an annual average rate of contraction of 8.3%. Industrial applications, by contrast, have been increasing at an annual average rate of 3.1% as new uses have proliferated.

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