Three Reasons Silver Prices Will Rally - Money Morning

Three Reasons Silver Prices Will Rally - Money Morning

www.TheSilverPrice.info

With the recent volatility and lows in the gold market, many investors also have been wary of silver prices. 

Silver on Friday closed down 0.4% to $28.87 per ounce. For the week, prices dropped 5.1%. 

Not the prettiest picture, but for the year silver has increased more than twice the price of gold thanks to growing confidence that the global economy will dodge another recession bullet. 

David Jollie, an analyst at Mitsui & Co. Precious Metals Inc., recently said to Bloomberg News, "A greater amount of confidence in the global economy generally means higher growth and that means more silver demand. If you look out beyond the end of the year, you can still see reasons to be bullish."

Why Silver Prices Will Rally

Increased Demand: The global head of metals analytics at Thomas Reuters GFMS, Philip Klapwijk, has forecast silver sales to increase as end-users expand inventories that thinned at the end of 2011. 

A large portion of silver demand - 80% - comes from fabrication, which is expected to rise about 3% to 5% this year to roughly 900 million ounces.

Also helping is China's manufacturing expansion and an increased electronics industry demand. 

Klapwijk also sees current monetary policy increasing investors' appetite for silver and triggering a subsequent price rise.