Worth and Douglas' men's rings which are part of a burgeoning industry of silver jewellery
Skyrocketing silver price a long-term prospect?
3.3 k views | Posted October 12, 2010 |
By Sonia Nair
Silver’s escalation to a 30-year price high on Friday October 8 could be the start of a long-term pattern, industry sources have speculated.
Since 2005, the precious metal has tripled in value from just under US$7 ($7.07) an ounce to approximately US$22 an ounce. And silver may climb 20% or more in the coming year, a recent Deutsche Bank report said.
However, American private investor service Money Morning, which delivers stock market news and investment advice, has speculated that silver prices could go through the roof again because of increased demand from China after the government lifted a ban on ownership of precious metals.
“China Central Television is running a campaign encouraging the population to invest in silver,” a Money Morning report said, “That means a billion potential new silver investors hitting the market. This is especially significant when you consider the average savings rate in China is 30 to 40%.”
Australian silver jewellery manufacturer Marco de Koster says the rising prices would affect jewellers for the worse.
“With our dollar going higher and almost on par with the US dollar, it could balance the rise out but if the prices keep going higher, the prices of silver jewellery will escalate upwards. This will affect manufacturing and production costs,” de Koster said.
According to this year’s World Silver Report, numerous factors have contributed to the surge in prices – none more so than its increased usage.
Silver has progressively become more important in industries such as electronics, renewable energy and health sectors – all of which depend on the precious metal – and that has caused its demand to catapult to a commercial level.
According to the report, men’s jewellery is a new niche market utilising silver where brands are discovering that the white metal can sustain their generally higher mark-ups over the fine metal price.
The Silver Institute executive director Michael DiRenzio said silver prices have spiralled since 2006, when it became an easier material to invest in. “The launch of silver Exchange Traded Funds in 2006 made it easier and more convenient for investors to hold silver,” he explained.
“The more recent rise in silver, however, is primarily due to the global economy, the low value of the dollar and a flight by institutional investors to safe havens, such as precious metals.”
Silver’s versatile nature meant it outperformed gold in 2009. In the aftermath of the global financial crisis, silver jewellery was better able to achieve price points in the “semi-disposable accessory market” and performed better than gold luxury goods, according to the 2010 World Silver Report.