"A shift in investor attitudes toward silver resulted in a significant change in buying patterns over the past two years in the silver market. Investors have become increasingly price-sensitive, still willing to buy and still interested in buying silver, but rather than buying the metal in a rising price environment with strong expectations for higher prices, investors now are commanding price dips in order to build long positions in silver. This new price-sensitive posture among investors combined with a reduction in fabrication demand growth has resulted in a 52.7% decline in silver prices between 29 April 2011 and 19 April 2013, when the silver price hit its lowest point, settling at $22.96, in over two years.
Investment demand for silver rose to 122.5 million ounces in 2012, up 32.1% from the previous year. This was the sixth highest annual volume of demand from investors on record. Investors remained interested in silver, amid concerns about U.S. fiscal issues, European sovereign debt concerns, and a slowdown in Chinese economic growth. The strong increase in annual investment demand mostly was driven by three major price declines throughout the year, which triggered strong bargain buying activity in the market. Prior to the April 2011 price peak, investors were buying silver irrespective of its rising price. While investors have not changed their positive views of silver as a good portfolio diversifier, a hedge against inflation and currency depreciation, and a safe haven, similar to gold, they have changed their views since April 2011 about how and when to purchase the metal. Since then they have been seeking bargain price levels as entry points into the market. This year’s Silver Yearbook highlights the changes in investment demand in recent years, disaggregated by various sources of investment products and major geographical regions."
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