Philip Klapwijk of GFMS said "a rebound in investment demand stemming from continuing loose monetary policies is expected to drive silver prices towards and possibly over $50 during 2013."
Klapwijk said buyer interest may not match that of 2011, but it will rise compared to 2012.
"We wouldn't be surprised also if silver's gains outpaced gold's, not only as the usual result of lower liquidity but also as memories of early 2011's painful losses (in silver) continue to fade," said Philip Klapwijk, global head of metals analytics for Thomson Reuters GFMS.
Here's why silver could be the precious metals star of 2013.
Silver Prices in 2013 Overall, GFMS says, demand for silver in 2012 broke down as follows: 43% from industrial users, 30% from investment demand, 21% from the manufacture of jewelry and silverware, and the remainder from photography and producer de-hedging, or closing out positions that had been used as a hedge.
In 2013, GFMS sees industrial demand being a bigger factor of higher silver prices.
Another is, of course, investment demand. Through Nov. 23, holdings in silver exchange-traded funds totaled 623 million ounces. That's up 47 million ounces from the 2011 year-end figure.
Besides "the persistence of ultra-low interest rates" driving investment demand, Klapwijk also cites demand from emerging markets as a factor.
"In China, for example, jewelry demand is growing at a double digit rate," he said.
GFMS also expects further producer de-hedging - unwinding positions used as a hedge - next year. This continues the trend from 2012, when GFMS says producers de-hedged roughly 10 million ounces of silver. Klapwijk said "producers continue to deliver into outstanding positions faster than they are replaced."
Money Morning Global Resources Specialist Peter Krauth is even more bullish than GFMS.
Krauth said he's expecting silver prices - at $32.55 in New York today (Thursday) - to climb to $54 an ounce in 2013.
Among the reasons Krauth cited for higher silver prices include the re-election of U.S. President Barack Obama, the gold/silver ratio and demand from both investors and industry.
How to Cash in On Higher Silver Prices Several ETFs give investors a chance to try to cash in on higher silver prices.
One of the best ETFs is the iShares Silver Trust (NYSE: SLV).
With some $5.5 billion in assets, SLV is the world's largest silver-backed ETF, using JPMorgan Chase & Co. (NYSE: JPM) in London as its custodian. SLV shares, which represent approximately 1.0 silver ounce each, are easy to buy and sell through your brokerage account.
Investors should also consider the Sprott Physical Silver Trust ETV (NYSE: PSLV). Sprott actually allows investors to redeem the units in the exchange for physical silver bullion. The physical bullion that backs the fund is held in Canada - away from the potentially grasping hands of Washington, but still in a market that protects property rights and that's easy for you to physically access.
But for Krauth's favorite "silver only" fund - as well as his way to double your profits on the white metal, check out this special investing report on playing the silver price surge. It's free to Money Morning members.
Read more Money Morning coverage of silver prices.
Related Articles and News:
Tags: best silver stocks, higher silver prices, higher silver prices in 2013, how to buy silver, how to buy silver 2013, investing in silver, investing in silver 2013, investing in silver stocks, is silver expected to rise, is silver on the rise, news for silver prices, price of silver, price of silver 2013, Silver, silver price 2013, silver prices, Silver prices 2013, silver prices expected to rise, silver prices in 2013, silver prices will they rise, silver stocks, sterling silver prices, top silver stocks, ways to invest in silver, why are silver prices rising, will silver prices rise 2013, will silver prices rise again