Demand for silver jewelry hit new records in 2010 according to The Silver Institute. A survey of 340 retail jewelers conducted in February by Nielsen/National Jeweler shows that 87% of retail jewelers experienced sales increases. The retail jewelers surveyed operate 4,000 stores.

The survey reveals that of the jewelers reporting sales increases, 52% saw sales increases of between 11% and 25%. Sales increased by more than 25% at 28% of the jewelers surveyed.

Sales of gold and platinum jewelry saw increases in sales of 4%, far below the sales increase in silver jewelry. As the price of both gold and silver continue to surge, many smaller investors naturally gravitate to less expensive silver.

The fact that silver jewelry sales increased substantially despite the huge jump in silver prices last year indicates that the general public is recognizing the need to diversify their wealth into an asset that has held its value over the millenniums.  Paper currencies have come and gone over the centuries, leaving paper wealth holders impoverished while gold and silver have always been a store of permanent value.

As the economy hit the wall during 2008 and 2009, silver jewelry sales declined from previous record levels to under 160 million ounces.  A ten year high in silver jewelry demand was reached during 2003 at 179.2 million ounces.  The four other years of the past decade during which silver jewelry sales exceeded 170 million ounces were 2000, 2001, 2004 and 2005.

The silver institute has not yet released their World Silver Supply and Demand statistics for 2010, but based on the survey cited, it appears that silver jewelry demand for 2010 may have exceeded the previous demand record of 179.2 million ounces during 2003.  Assuming that total silver jewelry demand increased by 15% over 2009, total 2010 demand could have exceeded 180 million ounces – a very bullish indicator as silver continues to increase in price.