Silver Seer Sees Surge

Philip Klapwijk of GFMS forecasts the metal hitting $15 per ounce by year-end.
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The price of silver could hit $15 an ounce in the next few months, according to predictions of a new report from GFMS, out Tuesday evening.

In its

Interim Silver Market Review,

to be presented at a dinner meeting of the Silver Institute in New York, the London-based specialty consulting firm says that the spot price of the white metal, which currently trades at around $12.85 an ounce in the spot market, could spike to higher than $15 an ounce amid considerable volatility over the next few months.

Such predictions will come as welcome news to owners of

iShares Silver Trust

(SLV) - Get Report

, the exchange-traded fund which holds silver bullion, as well as shareholders of silver miners, such as

Pan American Silver

(PAAS) - Get Report

and

Compania de Minas Buenaventura

(BVN) - Get Report

.

Philip Klapwijk, executive chairman of GFMS, who compiled the research, is expected to tell attendees of the Silver Institute's dinner that investment demand, a key driver of higher prices, is set for the third consecutive year of growth, with a net weight of 2,500 tons (80 million ounces) likely to be absorbed in 2006. Spot silver prices started the year at around $9 an ounce.

The report notes that although a net benefit to prices, "at some point the ETF could start to represent an overhang," with the fact that ownership is broad likely to moderate downside risk.

Industrial demand for the white metal will grow 1% this year, but is forecast to fall in 2007 as the world economy slows. Meanwhile, fabrication demand will decrease by about 860 tons, or 3% in 2006, and photographic use will drop almost 11% this year also as consumers continue switching to digital imaging.

The firm projects an increase in mined supply for 2007, up 500 tons, vs. forecast a rise of 125 tons in 2006.

Click here to see Video with Philip Klapwijk and his silver market predictions.