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Silver back to $20 this year?

GFMS Ltd., a metal consultancy headquartered in London, says that silver will climb back to $20 this year, primarily because of investor demand. The prediction came with the release of Silver Institute’s annual World Silver Survey, which GFMS compiles. GFMS, formerly known as Gold Fields Minerals Services, publishes the one of the two respected annual reviews of the silver market. CPM Group, New York City, produces the other.

GFMS bills itself as “the world’s foremost precious metals consultancy” and claims contacts around the world. GFMS also boasts of having “a research team of fifteen full-time analysts that comprises qualified and experienced economists and geologists; while two consultants contribute insights on important regional markets.” Because of GFMS’ standing among professionals, this prediction will receive much publicity and, perhaps, become self-fulfilling.

Based on my observations of market activity at CMIGS, silver back to $20 this year seems reasonable. Although sellers fed the market from about $8 up until silver topped $20 in March, few sellers are around now. Actually, selling dried up before silver hit $20, and with the drawback below $17 sellers have just about vacated the market.

Meanwhile, silver buyers, although many express optimism of $30 to $40 silver within a year or two, seem content to be long-term investors, expressing a willingness to hold for much longer that two or three years. Many silver buyers are new to precious metals investing, having been driven by concerns about the dollar, not because of silver fundamentals.

New buyers often talk of “passing something real” to their heirs. Silver purchased by such investors is said to be “in strong hands.” They are not likely to turn their silver for small, quick profits.

And, anyone with any knowledge at all of the financial state of affairs of the U.S. government knows that the causes of the problems with the dollar will not be solved anytime soon.

Further, silver is becoming a much more accepted investment than it was years ago. Many establishment firms no longer denigrate silver as they used to. When silver becomes a mainstream investment, the price could skyrocket. published a review of World Silver Survey 2008. The Survey itself costs $225. Of further interest to investors, the Silver Institute has on its website a free summary of the 2007 Survey.