Agoracom

Great fundamentals in this article

• Silver mine production is expected to record a sixth consecutive increase and even accelerate this year as several new major mines come on stream.

• The growth in industrial demand for silver is definitely off-setting the impacts of dwindling silver consumption in photography although photography still comprises 16% of silver consumption.

• Silver price gains remain impressive, with 2007's annual average representing a 23-year high. Price volatility was markedly lower last year at 26% compared with 2006's 45%.

• World silver cash costs increased 43% in 2007, due to cost increases in labor, consumables, and energy.

• Net investment demand is a relatively small item within silver's overall supply/demand balance. "However, it is our contention that investors ‘punch above their weight' when it comes to price determination-something that was very much helped by the only limited short-term price sensitivity of the other supply/demand variables."

• Silver investment activity in 2007 closely followed gold's lead. However, throughout 2007 silver tended to underperform gold.

• Investors have not been the sole drivers of silver prices. Fairly high levels of producer de-hedging and the resilience of fabrication were also instrumental.