The silver price (spot) is 1.58% higher on the day at 3090.

The average price forecast for silver for the duration of 2011 is at 35 USD an ounce at Bank of America. The forecast for 2012 is also at 35.

Demand from the photography sector has fallen steadily however the scope for further large reductions in offtake is limited.

Usage in applications like solar panels should increase going forward.

"Investors raise their exposure to silver because of increased usage in new applications, higher offtake from emerging markets and continued concerns over the stability of the global macro economy," say Bank of America.

Indeed, silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications.

This suggests that gradual increases of silver quotations were justified say BofA.

The commodity note goes on to say:

"Nevertheless, peak price rises seen of late (in particularly quotations at around $50/oz) were in our view heavily influenced by speculative interest. A slowdown in economic growth is usually not conducive to an outperformance of silver

"Looking at a fair-value model, silver prices slightly above $30/oz look justifiable at present. Hence, acknowledging the recent appreciation, we have marked-to-market the 2011 average forecast to $35.56/oz, but not lifted the general price profile."