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article imageInvestment demand for silver bullion to remain high for years

By Andrew Moran     May 12, 2010 in Business
Gold bullion and oil dominate commodity-related news stories but very few media outlets mention gold's companion: silver bullion. According to a latest report, investor demand in silver will continue to remain high for the next several years.
Digital Journal reported that gold bullion has hit a record-high of $1,245USD on Wednesday but rarely is silver bullion mentioned in news reports. But why? Investors bought an estimated 209.7 million ounces silver bullion in 2009 and financial experts foresee a higher amount by the end of 2010.
Silver investment
According to CNBC, silver is trading at $19.61USD and is up 31 cents and reached a 52-week high on Wednesday when it hit $19.74USD.
In its annual Silver Yearbook 2010, which was released on Tuesday, New York metals consultants CPM Group projected that investors will purchase 213.9 million ounces of silver bullion in 2010 and that it will continue to remain that way for the next several years, reports Reuters.
“Given the severity of today's financial imbalances, and the fact that major governments have allowed them to compound over the ensuing three decades, it seems fair to assume that investors will remain concerned about their financial futures for years to come, and consequently remain interested in buying more silver to add to their portfolio,” said CPM analysts.
Silver supply
In 2009, silver supply reached 826.1 million ounces and a 2.3 per cent increase in 2010 is expected. It is estimated that approximately 553.9 million ounces of silver was mined in market economies last year, according to Mine Web.
Silver mine production doubled in Peru, which mined 123.9 million ounces, and Mexico, which mined 194.7 million ounces. However production fell in 2009 in Canada, which has been on the decline since 2002, Australia and Chile. China also has played a role in silver mining. It is estimated that they mined 88 million ounces of silver in 2009.
In the United States, silver mine production remained unchanged when it only produced 39.5 million ounces last year.
In an interview with Reuters, Jeffrey Christian, managing director of CPM, said silver has benefited strongly from the global economic downturn, “Investors are looking at silver and saying: It's a good buy because I can buy it as a safe haven like gold, and if the economy does get better, it's an industrial play.”
Silver market manipulation
Last month, the Commodity Futures Trading Commission (CFTC) held hearings in Washington on possible gold market manipulations, reports Market Skeptics. Analysts like Ted Butler, a hedge fund giant, and the Gold Anti-Trust Action Committee have been collecting evidence of gold market manipulation for years.
Who are the culprits? Analysts say JP Morgan and Goldman Sachs have been doing this for years.
According to Silver Investing News, JP Morgan is being investigated by the Department of Justice and the CFTC over allegations that they have been manipulating the silver market on the London Bullion Exchange and NYMEX.
“JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the U.S. dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the U.S. taxpayers,” said metals trader Andrew Maguire in an interview with the New York Post.
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