Credit: Jurii / CC-BY-SA 3.0
After soaring to $50, the silver prices are now shuttling in the narrow margin from $32 to $36 per ounce. It isn’t easy to forecast the future of silver prices. However, there are several reasons that silver prices may spell well for investors in the medium and long term considering the several factors affecting silver prices.
The inherent qualities of silver, such as being a good lubricant, an excellent conductor of electricity, heat and a light reflector, had made silver a much-demanded metal for industrial purposes. There has been a tumultuous decrease in this demand in the last couple of years.
In an investing guide released by Jeff Clark, he states that the demand for silver from industries has fallen flat in the last few years. Demand for silver in-home items for uses such as flatware, cutlery has not grown over the period of last ten years. With the advent of digital storing and photographing, the use of silver in photography is negligible.
Despite these adverse situations surrounding silver, the demand for silver continues to soar. A study by GFMS Ltd for The Silver Institute reveals that the demand for silver will rise from 487.4 million ounces to 665.9 million ounces by the year 2015.
This rise in silver demand is estimated to come from new uses of silver in industries. The consumption of silver for electronics has risen by 120 %. The use of silver in solar panels and biocides has also increased considerably.
Use of silver in electronics and electricity
As silver is a high thermal and electric conductor, it is used for various electronic applications. A large portion of silver is used in constructing multi-layer ceramic capacitors, which are widely used in consumer goods. These are also used in cell phones, and considering the booming cell phone industry, it is reasonable to assume that the demand for silver in this sector will continue to grow. The demand for silver in the automobile industry is expected to rise with the industry’s growth. Silver contacts are used for joining electrical circuits in automobiles. Silver contacts are now even widely used even in windshield wipers to controlling the navigation system of seats.
Use of silver in solar power
The use of silver in solar panels is responsible for a large amount of demand for silver. The use of silver in solar is expected to increase as the countries worldwide have now realised the dangers of nuclear power after the tsunami that hit Japan. Silver in solar panels is not a novel concept and has been in use for some time. However, the political and financial goodwill was lacking earlier, which is now present. Therefore a large portion of silver demand is expected to come from this industry. The market for this industry is strong in Europe, China, the United States and India. Israel, Egypt and Morocco are geared to follow on a minor scale. This scenario has prompted the analysts to predict the rise of silver demand well over the estimated forecast.
Use of silver as a biocide
Silver was for the first time used as a biocide in 2002. Silver has prominent anti-bacterial qualities, and the use of silver as biocides has grown over six times its previous use.