Pan American Metals of Miami Agrees Investors are Boosting the Cost of Silver

MIAMI BEACH, FL, October 30, 2010 (Press-News.org) Pan American Metals of Miami believes that investors buying physical bullion are boosting the cost of silver, a metals analyst told a commodities outlook session at the annual convention of the Prospectors and Developers Association of Canada.

"That is the single most important factor pushing the price up," said Jeffrey Christian, CEO of CPM Group in New York. "They are not a residual actor; they are the single most active participants in the market." Pan American Metals of Miami is in concurrence with this statement.

Pan American Metals of Miami predicted the price will rise above 1980's annual average price of $21 - $22 per ounce. The price did spike as high as $48 on an intraday basis in London and New York in January 1980, but fell quickly and averaged around $38 for the full month of January that year. On an inflation adjusted basis, the daily high price would be about $96 today.

"During the silver market cycle, in a deficit market for silver, silver is sold from inventories and investors become net sellers", Christian said. During a surplus silver market, investors become net buyers, and it's during these periods when silver prices spike and Pan American Metals of Miami will continue to stay on top of this.

"That is the single most important factor driving the silver price up," Christian said; Pan American Metals of Miami agrees . "The increase in silver prices is really a function of an increase in demand in the investors' markets and the futures markets."

Exchange traded funds have become very influential in the market in the past two years, holding more than 220 million ounces this year, up from less than 20 million in 2002.

According to Christian, exchange traded funds have absorbed an enormous amount of silver, reducing liquidity in the physical silver market; they also played a major role in the 15%-16% hike in annual silver prices in 2006 as well. Pan American Metals of Miami believes this will continue in 2010 and onward.

"It's an industrial metal in short supply and with tighter supplies (than gold)," Christian said. There are a couple of billion ounces of bullion in world gold reserves, about half held by central banks, the other half held by investors, he said. "Silver doesn't have those kinds of stocks lying around in bullion form any more, and that makes it a lot more interesting," Christian says.

In certain countries, gold and silver jewelry has been used as a form of savings by the public. But that is now shifting, Christian says.

While demand for silver jewelry dropped last year by 25% in India, that was offset by a 33% increase in investment demand for bullion. The metals are still in demand, however, in the form of bullion, medallions, coins.

Pan American Metals of Miami thinks that the silver price will benefit from a combination of all the factors that are driving investors to hard assets, such as gold and silver. Silver will also benefit from pretty strong fundamentals: supply versus fabrication demand according to Pan American Metals of Miami.

Although the demand for silver in photography is dropping with the increase in popularity of digital photography, there was a 15% increase in industrial demand for silver last year in India alone, Christian says, mostly for electronics and plating applications, many of which are electronics themselves.

"So a very strong fabrication demand is driving silver, not only in India, but elsewhere," he said, "and will probably continue to, even though the price has already risen sharply, on top of the surging investment demand." This is in accordance with the thought of the professionals of Pan American Metals of Miami.

About Pan American Metals of Miami

Pan American Precious Metals of Miami is made up of a veteran group of traders, investors and brokers that offer investors solid insight into the world of precious metals bullion. The management team has over 100 years of experience in precious metals investments. "Our philosophy is that our traders only suggest positions, which the traders themselves would be comfortable holding".

For additional information, contact:
Debbie Bailey
Pan American Metals
305-532-4112
235 Lincoln Rd. Miami Beach, FL 33139
invest@investpanam.com
http://www.panamericanpreciousmetalsofmiami.com