Silver, also known as poor man’s gold, is expected to go down in terms of price, but Bart Melek, head of the commodity strategy for TD Securities, said that he doesn’t hope it will hit a record of lower price.

As a result of the subsequent drop in silver prices in May and in September 2011, the investors will have to face relative risk if they are planning to invest in silver, said Melek.

Even though the metal has partially recovered the cut down in prices and has regained its significance in the commodity market, it still stands off its previous highest price by 30%. Hence, investors are thinking twice before investing in silver.

In his analysis about silver, Melek exclaimed that there are several reasons for declining prices for silver. Some of them include trading margins, outsized volatilities, the broad move into cash, and expectations of much looser physical supply/demand conditions.

Melek also added that silver lacks behind another precious metal, gold, which has broken records in summer. He pointed out that the silver prices had faced all of a sudden drop when other metals’ prices were steadily rising.

The silver price drop in September 2011 was a consequence of the Greek sovereign debt crisis that alters into a broader European systemic problem. Hence, it has pushed the western world into another recession, quoted Melek.

As a result of a reduction in non-commercial interest as well growth of 9% in the supply of mined silver over the next two years, Melek said that the silver prices are expected to rise in the last month of 2011 well again in 2012.

According to the TDS projects, silver prices will stay on an average of $36.11/oz in 2011, $39/oz in 2012 and $30/oz in 2013.

Prior starting of 2011 until now, the amount of physical silver held by ETF/ETP funds is down by 18 million ounces (or -24%). However, gold ETF holdings are up from an estimated 2.8 million ounces (+4%).