The price of silver has increased steadily since its low of US $4.07 per ounce in 2001, and reached a 27-year high of over US $21.00 per ounce in March 2008. Silver prices averaged $13.45 per ounce in 2007, a 15.9% increase from the $11.61 average in 2006.  According to the CPM Group, a New York-based commodities research firm, this increase was a reflection of strong investment demand from many types of investors who were buying silver for all the same reasons they were buying gold: as a safe haven during times of financial market turmoil and as a hedge against inflation and a falling dollar.  At the end of 2007, total silver ETF holdings in Barclays' Global Investors iShares Silver Trust stood at 168.7 million ounces, compare to 121.1 million ounces in 2006.

The recently released CPM Group’s Silver Yearbook 2008 forecasts that net investor buying is expected to keep silver prices strong this year, although seasonal price weakness is anticipated during the second and third quarters.  CPM Group also predicted that higher silver prices are expected later this year and in early 2009. According to the London Bullion Market Association, silver is expected to average $17.56 in 2008.

The fundamental supply/demand picture for silver, although by no means sufficient to drive the price significantly higher, is currently at least supportive of prices well into double digits (in the absence of a major externally driven setback to industrial demand). For silver to breakout on the upside or the downside would therefore seem to require intervention from investors. In terms of downside, this could occur if a slide in global GDP growth prompted investors to liquidate their positions. A related sell-off in base metals would only add fuel to the fire. On the other hand, at the present time, it would appear that investors still look to expand their investments in commodities.