Blinding demand for solar energy will make silver prices shine - Gold

White metal's industrial applications abound even as photographic uses fade

Silver is having an even better year than gold, up more than 20%, and part of its strength lies in its dual nature as both a monetary metal and an industrial commodity. Alena Bialevich and Jeff Clark of Casey Research argue that silver prices are bound to gain as demand for solar energy, whose panels require silver, replaces silver's formerly widespread use in photography. They list other industrial applications such as solid-state lighting, water purification, and radio frequency identification:

For a long time, silver industrial demand was dependent almost entirely on one industry: photography. Silver-based camera film dramatically changed the structure of silver demand at the beginning of the 20th century. By that time, silver had primarily been used in silverware, jewelry, and as money. At its peak, photographic demand accounted for about 50% of the market.

But this is the 21st century, and in spite of substantial declines in film use, the modern world has developed many other important uses from silver's unique properties. Probably the most important shift is that industrial demand for silver no longer comes from a single field, but from numerous applications -- almost too many to count -- virtually none of which show any signs of slowing. This fact makes the forecast for silver demand more positive and stable; when one industry drops, others may offset the decline. ...

The growing number of industrial applications for silver represents a long-term shift in this market. Increasingly diverse usage is not only here to stay but will continue to grow, supporting the price and impacting the balance of supply and demand.

For investors, the thing to keep in mind is that while long-term prospects for silver prices are extremely bullish, to the degree prices are driven by this increased industrial demand, they are vulnerable to economic correction/contraction in the short term.

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Source: http://www.blanchardonline.com/investing-news-blog/econ.php?article=4941

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