Why Silver Is One Of The Most Important Elements On Earth

This month, we’re shining a spotlight on silver. Did you know that in over 14 languages, the word for "silver" is synonymous with "money"? That's no coincidence...

It’s far more than your ordinary metal, silver is a versatile marvel that has fascinated humanity and been used as money for thousands of years.

If you're new to the precious metals game or even a seasoned investor, here’s some of the reasons why silver should belong in your portfolio.

Silver Is the World’s Most Reflective Metal — Polished silver reflects 95% of the visible light spectrum, which makes it the most reflective metal known to man. Its reflective properties are also used for objects like mirrors, telescopes, microscopes and solar panels.

Silver Has the Highest Thermal Conductivity Of Any Element — Out of all the elements, silver is the best electric conductor, and is actually used as the standard by which other conductors are measured. On a scale of 0 to 100, silver ranks 100 in terms of electrical conductivity. Meanwhile copper ranks 97 and gold ranks 76.

Silver Is One of The First Five Known Metals to Discovered — Silver artifacts have been found dating as far back as 4000 B.C. Silver was the first metal to be used as currency, and in ancient Egypt, it was even valued higher than gold.

Stretching The Limits: Thin As Paper, Yet Unbreakable — Silver is an incredibly ductile element, capable of being shaped, compressed, and stretched while maintaining its structural integrity. For example, a single grain of silver can be pressed into a plate 150 times thinner than a typical sheet of paper.

In 1965, Public Law 88-36 Reduced Silver In Coins From 90% To 40% — Silver was eliminated from all coins in the United States beginning in 1970. As a result, silver coins containing 90% are valuable based on their silver content and are extremely desirable to collectors and investors.

Silver Is More Than Just Money

Many people are familiar with silver’s history as an investment – but unfortunately its numerous industrial applications are often overshadowed. The truth is nearly 50% of the annual silver supply is used in industrial applications and manufacturing. And that industrial silver is truly indispensable in modern society.

Electronics: Silver’s Invisible Everyday Presence

You may not see it, but silver is used in virtually every single one of your electronic devices. If you're interacting with a gadget that has an on/off button, it's highly likely that silver is a key component.

Known for its unparalleled electrical conductivity, silver is the perfect material for a wide array of applications. It's found in everything from printed circuit boards and switches to TV screens, telephones, microwave ovens, children's toys, and even the keys beneath our computer fingertips.

According to the Silver Institute's World Silver Survey 2023, industrial demand for silver reached a new record high of 539.6 million ounces in 2022, with the electrical and electronics sector being a significant contributor. This sector saw a 7% increase in silver demand compared to the previous year.

The ongoing expansion of 5G technology, the Internet of Things (IoT), and the push towards renewable energy sources are expected to further drive silver demand in the coming years. With over 15 billion devices currently connected to the internet worldwide and projections suggesting this number could double by 2030, the outlook for silver in the electronics industry remains strong.

Renewable Energy: Silver’s Role in Powering a Sustainable Future

In the pursuit of sustainability, silver has been proven to be a vital component, particularly in the photovoltaic cells that make up solar panels.

So, how exactly does silver function in solar cells? Silver powder is converted into a paste, which is then applied to a silicon wafer. When sunlight strikes this silicon, electrons are set free. Silver, being the world's most efficient conductor, swiftly channels this electricity either for immediate utilization or for storage in batteries for future use.

In 2019, the photovoltaic sector accounted for 10% of total silver demand, comprising 98.7 million ounces within a total demand of 991.8 million ounces. Moreover, the global demand for silver in the electronics industry, which includes solar technology, is expected to reach 50 million ounces by 2026.

As countries around the world increase their clean energy investments, the demand for silver in solar technology will continually rise, much like silver demand in electronics, batteries, medical equipment and more.

Silver's Healing Power: From Ancient Voyages to Modern Medicine

Long before the scientific community understood silver's antibacterial properties, the metal was already being used to combat harmful germs. During lengthy ocean voyages, sailors would drop silver coins into water and wine casks to keep them from spoiling. For years, physicians applied drops of silver nitrate into the eyes of newborns to stave off infections. Even in the grim conditions of World War I, silver foil dressed battlefield wounds, and silver sutures were used to stitch up severe injuries.

It is only in recent years that scientists have unraveled the mechanisms behind silver's antibacterial effects. Silver ions have the unique ability to penetrate bacterial cell walls without harming mammalian cells. This disrupts the essential chemical and structural bonds within the bacteria, effectively neutralizing them.

Today, the medical community is leveraging silver's unique properties in innovative ways. Medical devices like breathing tubes and catheters are now coated with silver to ward off infections. The metal is also applied to artificial bones and scaffolding materials to aid in the healing process. Silver-infused bandages and ointments are increasingly common, as they inhibit bacterial growth, allowing wounds to heal more quickly. Remarkably, silver has proven effective against bacteria that have developed resistance due to the overuse of chemical antibiotics.

The Electric Vehicle Boom Is Driving Up Silver Demand

The growth in electric vehicle sales has continued to accelerate. In 2023, global electric car sales reached 14.2 million units, a significant increase from the 6.75 million sold in 2022. This rapid growth trend is expected to continue, with projections indicating electric vehicles could account for 40-50% of new car sales by 2030.

Electric cars depend heavily on silver. Much like many other devices these days, the electrical and thermal conductivity of silver makes it an ideal material as part of an automobile battery. It is also ideal for use in EVs because it’s non-toxic and hypoallergenic.

As of 2024, the automotive industry consumes over 60 million ounces of silver annually. This figure is projected to reach nearly 90 million ounces by 2025.

The surge in EV production is creating a substantial challenge for the silver supply chain. According to the Silver Institute, photovoltaics alone are projected to account for 19% of global silver demand in 2024, equivalent to 232 million ounces. This represents almost a 20% increase from 2023 and a substantial 96% surge from 2022 levels.

However, there's a growing concern: the demand for silver is currently outpacing its supply, creating a looming bottleneck for the industry. The Silver Institute anticipates a deficit of 215.3 million ounces in 2024, with industrial applications driving 58.3% of the world's total demand of 1.2 billion ounces.

This supply-demand imbalance is likely to have significant implications for both the EV industry and the silver market in the coming years, creating a bottleneck and potentially driving up prices.

Silver Supply Constraints and A Looming Crisis

According to the World Silver Survey 2024, the global demand for silver continues to outpace supply, leading to a significant market deficit. In 2023, the silver market experienced a shortfall of 184.3 million ounces, marking the third consecutive year of deficit.

For 2024, the situation is expected to intensify. The Silver Institute forecasts the global silver deficit to increase by 17%, reaching 215.3 million ounces. This rise is attributed to a 2% growth in demand, primarily driven by robust industrial consumption, coupled with a 1% decline in total supply.

The reasons for this tightening supply are multifaceted:

• Rising Operational Costs: The mining sector is wrestling with escalating expenses, particularly in energy and labor.
• Environmental Regulations: An influx of stringent environmental laws is adding layers of complexity to the mining process.
• Mexico's Policy Shift: In a significant setback, Mexico, the world's leading silver producer, has instituted a ban on open-pit silver mining.

Industrial demand, particularly from the solar and automotive sectors, is a key driver of silver consumption. The Silver Institute projects a record high of 710 million ounces for industrial silver fabrication in 2024, a 9% increase from the previous year.

With global sustainable investments continuing to grow, the demand for silver — integral in many green technologies — is expected to rise further. The solar industry alone could require approximately 273 million ounces of silver by 2030, constituting roughly 1⁄5 of the total silver demand based on current trend projections.

For investors, these market conditions signal potential opportunities. The ongoing deficit, coupled with increasing industrial demand, could lead to a surge in silver prices in the coming years. As of May 2024, silver was trading at $32.16 an ounce, a 43% increase from June 2023, reaching its highest close in 11 years.

Given these market dynamics, the silver market appears poised for continued tightness, potentially driving prices higher in the medium to long term.

Seizing The Silver Opportunity

The evidence is clear: silver is not just a precious metal – it's a critical component in modern technology, renewable energy, and healthcare. With supply constraints and rising demand, the future for silver looks incredibly promising.

If you've been contemplating diversifying your portfolio, there's never been a better time to get started investing in silver today.

Invest in Silver Bullion

Until next time!

Best,
Brandon S.
GoldSilver