Industrial Demand for Silver is Increasing
Silver’s position in the investment sector is well-established. For the average person with limited funds, Silver’s low bar to entry makes it a very attractive Precious Metal that everyone can afford. Silver coins and bars play a very important role in many portfolios. Like Gold, Silver tends to have an inverse correlation to traditional investments such as stocks, bonds, and mutual funds.
Silver’s use in jewelry is also dynamically increasing due to the rise in prices of other Precious Metals. Well-known companies like Tiffany have made Silver jewelry an international favorite and continued to increase demand. But what is Silver used for, if not decoration?
Beyond jewelry, Silver is an important Precious Metal for many industrial uses. At one point in time, Silver’s primary industrial use was in photography for Silver-based imaging in picture development. But the advent of digital photography changed all of that.
With Silver’s historic industrial use no longer relevant, why is the industrial demand increasing?
Silver is now a primary metal for:
- Photovoltaics/Solar – Silver plays a key role in the production of solar cells that produce electricity. Silver’s use in photovoltaics is the leading current source of green electricity. As traditional electricity demand is straining the current capacity, new solar capacity saw significant growth. Silver’s use in photovoltaics increased by 13 percent in 2021.
Solar cells, electric cars, and other green energy technology increase demand for Silver. The Biden administration has ordered all federal government agencies to transition their vehicle gasoline fleets to electric motors. It is also providing tax subsidies and incentives for electric vehicles intending to eventually ban the sale of gasoline-powered cars at some future date.
From solar panels for homes and offices to vehicle charging stations and battery connections, Silver is an important component in every electronic system that consumes power. Recent estimates predict that this segment may consume between 10-12% of the global production of Silver. Regardless of the accuracy of those predictions, the demand for Silver in this energy sector is growing rapidly.
- Electronics – With the increased demand for electronics, virtually every mechanical device with an on/off button is likely using Silver as the contact.
- Medicine – Silver coatings are placed on various medical devices such as breathing tubes and catheters to help fight infections. Silver is found in bandages and ointments because it keeps bacteria at bay, allowing the body to heal faster.
- Various Other Applications – In Soldering, Brazing Metals, Automotive Uses, and Water Purification, demand for Silver is increasing.
Silver is part of many deodorants. Lab coats used in medical applications often have Silver embedded. Some seals on food products have Silver embedded in the seal. It’s also used to slow down the rotting process for some wood used outdoors.
Catalysts of all types benefit from Silver’s qualities as well. Silver is used to create catalysts for industrial applications covering many different manufacturing types, including the most common plastics we use daily. Ethylene oxide from catalysts is used for polyester. Other catalysts are used for formaldehyde in many textiles, adhesives, insulators, and more.
Silver is used in a variety of pigments, especially in stained glass. It also sees use in photography and printing. Both regular and 3D printing use Silver in inks. Silver oxide is also used for long-lasting batteries.
Silver’s Value & Demand
Silver has been an important investment metal for centuries. As the spot price increases, it becomes more profitable for non-producing Silver mines to reopen and for producing mines to go deeper and increase production.
But the tremendous upswing in modern industrial uses, especially in the Green Energy sector and Photovoltaic uses, is driving an increase in industrial use. Silver’s value is subject to supply and demand like other Precious Metals. Estimates are difficult to produce, but multiple sources report that approximately half of the Silver demand occurs from industrial use.
Here are Summaries and Demand Estimates – The Silver Institute and from Metals Focus:
Virtually every sector is reporting increased demand for Silver.
Global Electric Vehicle (EV) sales were 3.24 million units in 2020; that number is up 43% over 2019 and the 2020 number is significant considering it occurred during a global worldwide pandemic!
Automotive companies are all announcing their participation in the EV boom:
- Tesla plans to reach 20 million annual EV sales by 2030.
- BMW plans to double the number of EVs it offers to 25 models by 2023, with more than half of them fully electric.
- Daimler-Chrysler will invest $85 billion into EVs between 2021 and 2025.
- Volvo will triple its electric production capacity due to a strong year of EV sales.
Solar Demand for Silver
Yahoo! Finance reported in July of 2022 that global demand for Solar was on track to grow at 30% in 2022 alone and double-digit growth would continue through 2025. And IRENA, the International Renewable Energy Agency, has reported increasing solar capacity growth since 2016, expecting growth to continue. In fact, total global solar capacity has now outgrown wind energy capacity.
This all seems to point to that between the automotive and Green Energy sectors, there will be a sustained and potentially increasing demand for Silver as an industrial metal.
Of course, it’s impossible to forecast demand with 100% certainty accurately. The push for investment in industries that use Silver by governments worldwide is an encouraging indicator for the Silver investor.