Demand for silver is from three main sources; industrial and decorative uses, photography and jewellery & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2006, 430.3 million ounces of silver were used for industrial applications, while over 145.8 million ounces of silver were committed to the photographic sector, 165.8 million ounces were consumed in the jewellery market, and 59.1 million ounces were consumed in the silverware market.

Silver has a number of unique properties including strength, malleability and ductility, its electrical and thermal conductivity, its sensitivity to and high reflectance of light and its ability to endure extreme temperature ranges. Silver’s unique properties restrict its substitution in most applications and it can be found in all of the following: batteries, bearings, brazing and soldering, catalysts, coins, electronic components, electroplating, photography, medical applications, jewellery and silverware, mirrors and coatings, solar energy and water purification (source: www.silverinstitute.org).

Analysts have recently been forecasting that silver prices would rise to the $15-30/oz range and it has indeed risen to a current band of £17-$20.

Silver, which is revered by some investors as the “poor man’s gold,” is in for some interesting price action in 2008, with analysts forecasting annual average silver prices as high as $30/oz this year.

Analysts see silver as relatively recession proof. The pace in industrial demand for silver is not going to slow down, given eastern Asia’s economic growth, and a weakening of Western currencies will only fuel investment demand for the metal as a “safe haven” from inflation and currency depreciation.

We see Silver using the current level as a support line, and a steady run north from here. Breaking the $18 level will see the price break back through the 50 & 20 MAs, which could be seen as the confirmation required.