In line with many other commodities, including precious metals, silver, often described as poor man's gold, has shed some gains from a 30-year high at $30 an ounce in December to trade now at a little less than $29.40 an ounce.

Such correction is in order as the November US unemployment rate fell to 9.8 per cent, this year's gross domestic product growth forecast for the world's largest economy is three per cent and the dollar rally is finally on.

The past year saw some spectacular rallies in silver with prices rising 80 per cent on perception of it being a store of value, continuing shrinkage of above-ground refined silver and demand staying ahead of supply.

The fact that for the past two decades, demand for silver was more than mining supply, the above-ground silver float had hit historical low of less than one billion ounces.

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In response to tightening supply situation, the world has seen drawing down of stocks held on government and private accounts.

Though, not in any significant quantities, physical shortages and good prices off late are also leading to silver recycling.

There will be more of recycled silver if prices rise as the year advances.

An umbilical kind of relationship in terms of prices exists between silver and gold.

Both the precious metals have gone through some corrections as the New Year dawned. Gold over the last two years and silver in 2010 saw impressive price appreciation and therefore, irrespective of their fundamentals are likely to experience occasional dips.

At their respective prices, silver at this point on a historical basis is grossly undervalued vis-a-vis gold.

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This is in spite of silver outperforming the yellow metal by a very high margin last year.

Most precious metal experts have forecast that silver once again this year will gain more, principally on safe haven demand than gold.

At the same time, if gold gets a boost for reasons such as concerns about Portugal's sovereign debt and UN world food prices index climbing to a record level in December, then silver also stands to gain, very likely more than its illustrious partner in the precious metals basket.

Silver's demand is both for its store of value and industrial applications now also embracing new generation products like flat screen panels, iPad, solar panels.

No doubt, industrial demand for silver took a hit as raw film-based photography made way for digital kind.

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But many new applications, including use of antimicrobial and antibacterial properties of silver in the medical space are compensating for the lost ground in photography.

Silver is no longer a metal used for making jewellery for the masses only. It is now seen as an ideal material for making jewellery for high fashion women too.

Moreover, silver jewellery made in our country is coming for growing appreciation in the world market.

However, the mainstay of silver demand is its application in a wide range of industries.

What is mostly going to help the cause of price of the metal is the existence of a limited number of pure silver mines with their reserves getting depleted over time.

But for a long period, silver almost to the extent of 80 per cent is derived as a by-product of base metals like copper, zinc and nickel.

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Supply of silver as a derived product got squeezed since the second half of 2008 with the world lapsing into a scorching recession on the back of a systemic financial failure.

Simultaneously, as there was loss of confidence in currencies with stimulus programmes running full steam in several countries led by the US, investors thought it wise to turn to gold and silver to protect their wealth.

To add to supply concern, China, the world's third-largest producer of the metal after Peru and Mexico, effected major cuts in exports of this high value metal to take care of the domestic investment demand and industry requirements.

According to an observer, the Chinese demand is coming from all areas, 'including investment, jewellery and fabrication.'

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China is not short of millionaires with huge appetite for gold and silver.

The country that exported 3,500 tonnes of silver in 2009 sold nearly 60 less in the world market in the first three quarters of last year.

China is also taking considerable physical silver position. The country, now the world's largest gold producer, caused a stir by importing 6.7 million ounces of the yellow metal in the first ten months of last year against imports of 1.6 million ounces in 2009. But China does not export gold.

With so much cash to spare, China is in an enviable position to splurge on precious metals like no other country.

Experts say the bulging inventory will come to Beijing's aid whenever it seeks a major world status for its currency.

Where will you see silver prices at 2011 end? Bullion experts say the price will be in the range of $35 to $45 an ounce.

Though silver will forever draw inspiration from gold, chances of the white metal outperforming the yellow metal once again this year remain a distinct possibility.