On 21st April I summarised the reasons why I had invested in silver here http://aprivateportfolio.blogspot.com/2006/04/silver.html . With impecable timing, the CMP Group's Silver Yearbook 2006 was released on 25th April. The key forecast was that after 16 years of deficit (demand for silver exceeding supply), the silver market is forecast to show a surplus in 2006 (supply exceeding demand) of 48.4 million ounces.
Although it is not possible to get all the details from the press release (and I am not intending to purchase the yearbook), it appears that the forecast surplus is a largely a product of falling demand for use in photography and jewelry and silverware. A drop in the use of silver in photography represents a continuation of a trend that has been evident for some years and is not a surprise. The predicted fall in demand for jewelry and silverware is (I think) due to the rising price leading to reduced demand.
The supply side includes the forecast sale of 32 million ounces by the Reserve Bank of India which will complete the disposal of the RBI's entire reserves of silver.
It is difficult to draw any conclusions from the press release (there are a wide variety of opinions floating around the internet) . While I have reached the tentative conclusion that the case for a long term investment in silver is intact, I am not as bullish as I was before reading the press release. I am n0w intending to hold my current position and am reconsidering an earlier decision to continue accumulating.