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NEW YORK (Scrap Monster): Silver can continue to benefit from gold’s positive momentum on investment interest, but needs improvement in industrial activity, said Suki Cooper, precious-metals analyst with Barclays Capital.

Silver has been the strongest precious metal so far this year, rising 22%, she notes. Chinese imports have picked up in the last couple of months, but supply/ demand fundamentals excluding investment have not tightened considerably, leaving silver’s fate in the hands of investors.

However, investment demand has been strong lately. “Silver ETP (exchange-traded-product) holdings have risen to their highest since May last year and inflows for the year-to-date across the open-ended products have reached 775 (metric) tons, almost the equal and opposite of flows last year (-793 tons), and inflows in September are set to be the strongest month since July 2011 with inflows at 411 tons,” she added.

“On the retail side, silver coin sales have also gained momentum with the U.S. Mint reporting sales thus far in September to be the strongest since January this year at just over 100 tons. Although short-term positioning on Comex silver has risen to its highest since April last year, it is still below the peak, and the source of the acceleration in demand last year from the investment community in China has also notably gained momentum at the end of August and into September,” Suki noted.

“Investor interest likely retains the scope to push silver prices higher in the near term, but given its short-term nature, industrial demand would need to follow suit,” she concluded.