The global head of metals analytics at GFMS, a Thomson Reuters unit, projected that the price of silver may go up by around 38 percent in 2013. It is also expected that investing in precious metals, on the whole, will increase considerably due to the uncertain global economic conditions.

While the price of gold increased by 10 percent in 2012, the price of spot silver moved up by 17 percent. Silver was trading at around $32.50 per ounce by 1020 GMT. According to Philip Klapwijk, the Global head of metals analytics, “Strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates,” are some of the major reasons why investors are expected to invest more on silver.
“We are thinking prices will trend higher next year. I’m not convinced that we are going to $50. I think we will definitely see $40 to $45 prices,” says Klapwijk when attending a conference in Hong Kong.

Klapwijk also said that some emerging markets may see some growth in the demand for jewelry. “In China, for example, jewellery demand is growing at a double digit pace,” said Klapwijk. However, nothing is as encouraging as the prospect of silver, which, according to Klapwijk, is going to trade between $30.90 and $36 for the rest of 2012.
The fact that holding on the largest silver-backed ETF, New York’s iShares Silver Trust, increased by 4.5 percent in 2012 is a clear indication that silver investment demand is poised to grow further in coming months.

However, according to Klapwijk, the silver market’s surplus in 2012 is likely to edge up by 300 million ounces, when compared to the last year. This happed mainly due to the low fabrication demand for silver in 2012. Moreover, mine production of silver is moving up at the rate of four percent in 2012.

According to Klapwijk, there were two major reasons why the fabrication demand for silver dipped in 2012.  Firstly, the growth in industrial fabrication for silver slowed down significantly during the last one year. Moreover, after solar power subsidies dried up in Europe, the demand from the electronics field and photovoltaic end users slowed down considerably as well. Despite that, the price of silver is expected to grow up considerably in 2013.