The silver price in 2004 staged a dramatic rally, rising a robust 36% to average US$6.66 per oz. that year, according to the recently published World Silver Survey 2005.
The price performance reflects fundamental changes in silver’s supply/demand balance. Last year also witnessed a boom in investor activity, mainly driven by funds operating on futures exchanges and considerable buy-side interest from high net-worth individuals.
Another key highlight in 2004 was the strength of fabrication demand (industrial demand in particular), especially in light of the higher silver price. Coupled with other factors, such as a decline in scrap supply and a dramatic decrease in government bullion sales, this could well herald a period of reduced pressure on the price, in comparison with previous years. Indeed, throughout the first four and a half months of 2005, the price averaged US$7 per oz.
The survey is published annually by the Silver Institute and Gold Field Minerals Services, based in Washington, D.C., and London, U.K., respectively.
Supply20032004
Mine Production611.2634.4
Net Government Sales88.261.7
Old Silver Scrap183.6181.1
Producer Hedging-2.0
Implied Net Dis-investment–
Total Supply883.1879.2
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