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Jewelry-makers’ demand for silver drops in ‘09

By Catherine Dayrit
December 18, 2009

New York--Silver may be a buzzword at the sales counter, but demand for the metal's use in jewelry is actually expected to decline for the 2009 year, CPM Group's new "Silver Long-Term Outlook" report, released Thursday, reveals.

The use of silver in jewelry and silverware currently accounts for 35 to 40 percent of total fabrication demand for the metal, CPM Group's Adam Crown, executive vice president, told National Jeweler, adding that demand for silver is expected to decline in this category by around 4 percent to 249.9 million ounces for the 2009 year, primarily due to dampened consumer spending on non-discretionary items.

The use of silver in jewelry and silverware peaked in 1998 at 293.5 million ounces, but fabrication demand in the category is still up from 20 percent or so in the late '80s compared to 10 to 15 percent in the early part of the decade.

As for who is buying, the largest consumer of silver for use in jewelry and silverware is India, followed by Thailand, Italy and then the United States.

Prices, set to average close to $14.70 in 2009, are more than triple the average $4.81 average price from 1990 through 2003, according to the report. Prices have been pulled higher by strong investor demand--investors over the past four years have bought more than 400 million ounces of silver--coupled with strength in some electronic and other industrial applications.

"In the medium term, CPM Group expects jewelry demand to continue to decline but at a lower or slower rate than we've seen in the past year," Crown said.

Beyond 2011, the consultancy is forecasting a gradual recovery in demand for silver jewelry.
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