How far will silver prices go?

How far will silver prices go? $45 or the historical high of $50? In Indian markets silver prices continued to climb on hectic buying by stockist and industrial demand. Silver prices in India have zoomed close to 57,000 levels Indian silver imports have reportedly dropped in April 2010-February 2011 to 343 tons from 451.5 tons in the corresponding period the previous year.

Silver and gold has tremendously benefited from safe haven buying thanks to Middle East tensions, economic problems in Europe and global economic recovery concerns. Silver has outperformed gold as industrial demand constitutes a major part of silver demand and hence in the last week of March iShares Silver Trust ETF witnessed gains in assets while gold ETFs witnessed redemptions.

Both India and China have contributed to the surge in silver prices in the past few years. China has reportedly imported more than 100 mn ounces of silver in 2010 and therefore continued buying by these two populous nations would have a major impact on silver prices. India is likely to import 2,800 to 3,000 tonnes of silver in 2011, according to Bombay Bullion Association.

Industrial demand for silver continues to be buoyant with Silver Institute forecasting that silver for industrial demand will rise to 665.9 mn troy ounces by 2015 from 487 mn in 2010. A recent Silver Institute report identifies 11 still-new applications for silver, ranging from food packaging to radio identification tags to auto catalysts, which collectively could exceed 40 million ounces of industrial demand by 2015.

Gold and silver are safe haven investments among a persistently weak US dollar,” said Frank Gaudino, managing partner at Lloyd’s Commodities precious metals wholesale dealer. “With the earthquake and nuclear disaster in Japan, ongoing chaos in Libya and the Middle East, and worries over the European economy with Portugal’s and Ireland’s problems, precious metals prices will continue hitting highs.”