Silver may yet outshine gold in 2010 as spot prices for the white metal respond to the prospect of a surge in industrial demand. With a little additional help from investment demand, silver may even rally into the $25 an ounce range. So says Chintan Parikh, a commodity analyst at the CPM Group - a leading New York-based commodities research, consulting, asset management and investment banking organization.
"Prices may spike as high as $25," he says. At the very least, it should breach its most recent high, which was set at $20.79 in the spring of 2008, he adds.
Parikh says much of this impetus for higher prices is being driven by the fact that traditional industrial end users of silver, such as the ever-burgeoning global electronics industry, have in recent weeks begun to replenish severely depleted inventories.
In fact, silver inventories became so run-down during the financial crisis that it may take up to six months to fully rebuild them to normal levels. Parikh also notes that demand from the industrial sector tends to be quite price inelastic, meaning that buyers have few options other than to pay prevailing prices.
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