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RAPAPORT... The Thomson Reuters GFMS interim silver market review concluded that investors were badly burned in May when prices fell, thus many of them are reluctant to buy. Yet, investment demand is the primary driver of silver prices this year, being integral to both the rally above $37 per ounce in February and the plunge below $30 from March to May. The consultancy group estimated that silver used in industrial applications will fall by 6 percent this year. With silverware and photography continuing their secular downtrend, the only bright spot came from jewelry demand, which is projected to rise 1.2 percent year on year to 178.7 million ounces. The group concluded, too, that rising silver jewelry sales, particularly in China, will more than offset any contraction from the West. Thomson Reuters GFMS cautioned that sentiment could prove volatile in the year ahead. The downside for the short term though rests on the bleak economic outlook in developed countries, which could drive investors to shun risky assets, the looming “fiscal cliff” in the U.S. and Eurozone stagnation. However, silver should support low $30s price levels before launching into ''a new powerful upward trend'' as investors come back and higher inflation pressures emerge again. The group forecast that silver will reach $36 per ounce before the end of 2012 and then perhaps new records could be achieved, above $50, at some point well into the year 2013.
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