Silver looked good until Wednesday last week, but ultimately declined for the second week running after falling from its late-December high at $31.23, following gold and stocks lower.
It closed in London below its recent lows at $28.38 and a break below $28 next week may well trigger further falls towards the late-November low around $26.50.
On the supply side, there were record outputs from Fresnillo, the Mexican precious metals miner, which pushed the price lower.
Silver production rose 2% to 42.1mln ounces, much more than their target of 41.1mln ounces. Silver production is expected to rise 5% in 2011, putting Fresnillo in a good position, according to Liberum Capital: “With continued positive silver demand outlook, coupled with a traditional investor appetite akin to gold, silver prices remain well above the historical average and leave Fresnillo well-placed to reap the benefit,†they said.
Silver has posted gains of around 637% since early 2009, vastly more compared to gold‘s gain of 255% in the same period.
However, the un-mined supply of silver is dwindling, yet demand is increasing, especially for investment purposes.
Some investors see silver advancing another 79% this year, while others have a more modest estimate, however all agree on silver‘s potential to rise much further and short term dips should be bought.
