* Silver ETPs show resilience to lower spot prices
* Demand from solar panel sector likely to slow
* Mine output at record levels last year
* Gold/silver ratio at highest since September 2010
By Clara Denina
LONDON, May 10 Silver prices swung wildly in the wake of extreme losses seen in gold last month, but while investors fled bullion-backed funds in droves, holdings in the less glamorous precious metal are remarkably robust, for now.
Silver carries the precious and industrial metal tag due to uses in jewellery and manufacturing, but its fundamental picture is far from rosy.
The global market is in oversupply to the tune of some 4,000 tonnes in 2013, while industrial demand - accounting for some 50 percent of total usage - has been clipped by a slowing solar panel sector, where high profile names such as China's Suntech Power Holdings have fallen on hard times.
Prices plunged 14 percent in April, sparked by gold's worst two day drop in 30 years, while the gold/silver ratio is now around its highest level since September 2010 with an ounce of gold currently buying 61 ounces of silver.
And yet holdings of silver-backed Exchange Traded Products (ETPs) have emerged apparently in rude health.
Major asset manager BlackRock said approximately $18 billion had been seen in outflows from gold ETPs, while silver holdings have recorded $800 million of inflows.
"Investors held silver positions as they thought there was going to be continued monetary expansion, which would lead to strong economic growth," Macquarie analyst Matthew Turner said.
Such a scenario would be more beneficial for silver, Turner said, because while economic expansion dents the safe-haven case for gold bullion, it boosts prospects for silver's industrial applications.
Global ETP assets under management were more than $3 trillion by the end of April with $106 billion, or five percent, allocated to gold ETPs and $14 billion or 0.7 percent in silver products, BlackRock data showed.
Credit Suisse saw how the silver ETP data could be given a positive gloss.
"Silver bulls could point to the ongoing accumulation in the metal's ETFs as a justification for positive outlook, as in the knowing investors are buying; it's only a matter of time for the price to follow suit," Credit Suisse analyst Tom Kendall said in a note.
BlackRock investment strategy director Ursula Marchioni said however that the reality of silver's resilience could be due to it simply lagging gold.
"If we look at why (silver) ETPs inflows are not going in the same direction as prices, one reason is potentially a time-lag situation, as gold is the headline these days and there is a lot of momentum around it which hasn't been captured in silver at all," she said.
Retail investment in silver, like bullion, has been strong and exacerbated by April's price drop. Silver coin sales from the U.S. Mint posted their strongest four months in at least 27 years in 2013 so far.
But that has failed to offset a fall in industrial demand. While implied net investment rose by nearly 28 million ounces last year, fabrication demand, which includes industrial usage, silverware and coins, fell by more than twice that amount.
Mine supply also rose by another 30 million ounces to record levels.
Growth in global solar panel demand, once seen as a key area for silver use, will halve to nine percent this year from 18 percent in 2012, HSBC has said. Demand for silver from the solar panel industry accounts around 10 percent of the metal's industrial consumption.
"Due to over capacity and profitability issues in China's solar panel industry, industrial demand for silver may decline this year," HSBC analyst Howard Wen said.
Weak consumption from industrial users in the electronics industry, terminal decline in the photography sector and record-high supply are likely to continue to be features of the silver market, which will ultimately take a toll on ETP holdings.
"Silver remains plagued by oversupply and the longer-term bear market in gold will take silver prices lower," Societe Generale analyst Robin Bhar said.