New York, 27 May 2010

Silver Posted its Second Highest Price Average Since 1980: Strong investor demand and a recovery in industrial demand during the course of the year were key factors in a strong performance for silver prices in 2009, according to World Silver Survey 2010, released here today by the Silver Institute. The white metal’s price has continued to make gains as Europe now battles a sovereign debt crisis that threatens to undermine a still fragile global economy.

While the global recession caused fabrication demand to fall sharply in the early months of 2009, a rebound began in the latter half of the year, which has continued into 2010. Flat supply is expected in 2010, says the report’s authors, and solid gains in fabrication demand are anticipated, which should buoy prices this year.

Silver Price and Investment

Silver posted an average price of $14.67 in 2009, the second highest average since the high reached in 1980. Strong gains in investment and a recovery in demand later in the year, were the prime reasons for the 53 percent intra-year rise.

Much of 2009’s strength in investment can be attributed to soaring demand for silver exchange traded funds (ETFs) as well as physical retail investment. This occurred on the heels of 2008’s previous record ETF inflow of 265.3 million ounces (Moz) of silver. Total ETF holdings rose by 132.5 Moz over the course of 2009, ending the year at an impressive 397.8 Moz as new funds entered the marketplace from Australia and the United States.

In 2009, coins and medals fabrication rose by an impressive 21 percent to post a new record of 78.7 Moz, driven by a jump in retail demand, principally in the United States, although western European demand was also stronger in 2009. In the United States, the increase in its bullion coin sales was also accompanied by a surge in bar demand. Of note, demand for the U.S. Silver Eagle bullion coin reached record highs in 2009, with over 28 million Eagles sold. To put last year’s performance into context, over the 1986-2008 period, U.S. Eagle minting averaged 7.7 Moz per year.

Silver Demand

The bulk of the 11.9 percent decrease in 2009’s total fabrication demand was primarily driven by the global financial crises, reflected mostly in a sharp drop in industrial offtake, to its lowest level since 2003. Total fabrication demand totaled 729.8 Moz and industrial demand posted 352.2 Moz in consumption.

Significant inventory cuts in the industrial supply pipeline, combined with a protracted decline in end-user orders, for example from a far weaker automotive industry, were the primary reason for lower industrial demand last year. While demand was noticeably weaker in the first quarter of 2009, it gradually improved as the year progressed. Overall, the losses were concentrated in East Asia, North America and Europe.

Implied net silver investment increased by a staggering 184 percent to 136.9 Moz last year, recording its highest level in the past 20 years. While overall jewelry demand dipped slightly by only 1.1 percent in 2009 to 156.6 Moz, India and China posted increases in jewelry demand last year, offsetting losses in most other markets. Silverware demand reversed the trend of the last decade rising by a respectable 4.6 percent to 59.5 Moz, largely due to a surge in Indian fabrication.

Photographic demand was not immune to the global recession, as consumers took fewer pictures, with the continued inroads made by digital photography pushing silver photographic demand down to 82.9 Moz. Producer de-hedging of silver contracts rose substantially in 2009 to 22.3 Moz as several large silver hedge books were wound up.

Ends --

Copies of World Silver Survey 2010 may be purchased by the public for US$225 from the Silver Institute, 888 16th Street, NW, Suite 303, Washington, DC 20006, tel +1 202/835-0185; fax +1 202/835-0155, or from the Institute's web site at www.silverinstitute.org

For copies outside North America, please contact GFMS by tel +44 (0) 20 7478-1750; fax +44 (0) 20 7478-1779, or via the web at www.gfms.co.uk. You can also email your request to the Silver Institute at info@silverinstitute.orgThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it and GFMS at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .ukThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it.