While 2008 was supposed to be a banner year for silver, CIBC Global Markets suggested that events later in the year have tarnished silver's performance.

In a recently published analysis, CIBC metals analysts Barry Cooper, Brian Quast and Cosmos Chiu maintained their 2009 and 2010 silver price forecasts of $12/oz and $11/oz respectively, advising, We believe that holding gold is better than holding silver through what we think will be a tumultuous 2009 and possibly longer.

After reaching highs of more than $20/oz in the early part of 2008, the analysts noted silver spent much of the latter part of last year languishing near $10/oz.

A general interpretation has been that silver fell along with base metals, while gold's investment qualities held it somewhat above the fray. In first answering whether silver fell more the gold, the answer is a resounding yes, they said.

 After a disastrous late 2008, we feel that silver's downside beta to gold will remain higher than its upside beta, the analysts asserted. At the first sign of a decline in the price of gold, investors will likely sell their silver holdings, but retain more of their gold holdings, since gold has a superior reputation as an insurance policy compared to silver.

Therefore, for 2009, we believe that silver will likely offer lower returns than gold, with higher volatility, according to CIBC.

The analysts also predicted that as base metals increase in value, more silver mines become feasible, and silver output from mines will increase, perhaps beyond any increase in demand for the silver ETF.

However, a rising lead and zinc price would be a boon to silver producers and developers, the analysts also noted. As lead and zinc prices are expected to rise through 2009 and 2010, CIBC advises that many silver projects would likely come on line, thus increasing the supply of silver, and likely providing an overhang for the silver price by 2010.

In essence the metal value per tonne of ore mined could increase for the next couple of years, but this will be less due to any increase in silver prices, and more due to increasing by-product credits. This bodes well for the equities, particularly those with silver-lead-zinc deposits, but is unlikely to assist the silver price, the analysts said.

With the recent recovery in silver prices, CIBC expects Pan American, Hecla, and Silver Wheaton to all generate healthy cash flow from operations. However, the analysts noted, debt servicing remains a concern for both Hecla and Silver Wheaton.