ETF Securities has released its weekly metals outlook. With big gains in silver and gold in recent days, we have been tracking the moves in ETFS Physical Silver Shares (NYSEMKT: SIVR) and iShares Silver Trust (NYSEMKT: SLV).

This morning’s refers back to last week’s report from the Silver Institute that industrial demand for silver, aka The Devil’s Metal, is now expected to rise by 7% in 2013 to a new record. The report also highlights that investment demand will remain a key issue in 2013. Effectively, the report is calling for a rebound in 2013 after silver lost ground in 2012.

ETF Securities said:

The electronics industry is expected to be the mainstay of industrial demand over the next two years, with growth in emerging Asia the predominant force. China is expected to play catch-up with the US in terms of industrial demand, with the two nations combining to provide over 40% of industrial demand. The forecast gain of around 7% in 2013 is expected to be driven by solid growth in silver oxide catalyst production, while the photovoltaic industry is expected to see growth rebound in 2014. While industrial demand accounts for around 55% of overall silver demand, investment demand has been the main driver of price strength in 2012 thus far. Silver has been the best performing precious metal in 2012, with prices have rising by 20% ytd. At the same time, stocks in COMEX warehouses have risen by 21%, an indication that industrial demand remains soft in 2012. The weakness in industrial demand has been borne out by the Silver Institute’s estimated 6% downturn in industrial demand this year.

Another big issue is back to gold. We recently highlighted which central banks in the world have bought gold. ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) and SPDR Gold (NYSEMKT: GLD) saw big moves on Friday and last week. ETF Securities said:

Central banks accumulate over 40 tonnes of gold bullion as investors push global gold ETP holdings to fresh record. Emerging market central banks are at the vanguard of foreign exchange reserve diversification, accounting for the vast majority of the gold buying in October. Brazil and Kazakhstan were some of the largest contributors to the 9% y-o-y growth in October, buying 17.2 and 7.5 tonnes, respectively. Investors also continued to buy gold, pushing global ETP holdings to over 83 million ounces last week, a fresh record high. Uncertainty over the outlook for the Eurozone and the precarious position of the US economy approaching the ‘fiscal cliff’ remain the main risks to the global economic recovery. While the market remains optimistic that Eurozone ministers will come to an agreement to clear the way for the next disbursement of Greek bailout funds when they meet today, further delays are likely to be supportive of defensive assets like gold.

JON C. OGG

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