Silver is arguably one of the most important metals in the modern world. But how does its demand and supply look like?
Sectors & Industries
May 24, 2024
Silver is a versatile metal with a wide range of applications due to its unique properties.
Its high electrical and thermal conductivity make it essential in electronics, solar panels, and electrical components. Silver's antimicrobial properties are utilized in medical devices, while its malleability and ductility make it suitable for jewelry, silverware, and decorative items.
Photography also relies on silver halides, and it has applications in brazing alloys, batteries, water purification, and cloud seeding. With its rich history and enduring popularity, silver continues to be a valuable material across various industries, showcasing its importance in modern society.
Silver is important due to its unique physical and chemical properties that set it apart from other elements. With an atomic number of 47 and a distinctive atomic weight of 107.87, silver's nucleus structure and chemical symbol 'Ag' reflect its historical significance.
Known for its lustrous appearance, malleability, and exceptional conductivity, silver's resistance to corrosion, even in its pure form, makes it a durable and aesthetically appealing metal.
Its versatility extends to various industries, from technology to medicine, where its conductivity, antimicrobial properties, and catalytic capabilities are leveraged for applications ranging from electrical components to medical devices.
Silver serves a multitude of purposes across various industries. It excels in electronics and electrical conductivity, being utilized in integrated circuits, keyboards, semiconductor cables, and more. Its use extends to jewelry and silverware for its aesthetic appeal and durability. In photography, silver halide crystals are pivotal, while in antibacterial applications, silver ions are effective in purifying water and preserving wood.
Coins, rounds, and bullion bars are crafted from silver for investment and collection.
Additionally, silver nanoparticles are integrated into textiles for antimicrobial properties, and in water treatment, aerospace, automotive, food packaging, medical devices, and nanotechnology for their diverse applications ranging from enhancing air quality to extending shelf life and reducing infections.
The largest consumers of silver are industrial sectors such as electronics, solar energy, and electric vehicles. These industries heavily rely on silver due to its unique properties like conductivity, reflectivity, and durability.
Silver is extensively used in electronics for its conductivity, in solar panels for its ability to conduct electricity efficiently, and in electric vehicles for various components like batteries and wiring due to its conductivity and corrosion resistance.
The electronics industry benefits from silver the most due to its exceptional conductivity and corrosion resistance. Silver's high conductivity makes it an indispensable component in electronics, employed in devices ranging from smartphones to solar panels, ensuring seamless functionality.
The increasing demand for electronic devices, driven by advancements in technology such as the Internet of Things (IoT) and 5G networks, further boosts the demand for silver in the electronics sector.
Silver can be a more affordable and volatile investment compared to gold, but gold is generally considered a more stable and powerful diversifier. Silver prices tend to be more volatile, with the potential for higher returns but also greater risk. Silver is more commonly used in industry, making it more sensitive to economic changes.
Investing in physical silver offers many of the same benefits as gold, such as a tangible asset and protection against inflation, but at a lower price point. However, gold has historically been less correlated to stocks and other major asset classes, making it a more effective hedge against market downturns.
Silver has shown instances of outperforming gold, especially during specific market conditions.
Recent data from CNBC highlights how silver's price surged significantly, reaching a seven-year high and experiencing a nearly 39% increase since mid-July 2024, outpacing gold's performance during the same period.
Ultimately, a diversified portfolio may benefit from exposure to both precious metals.
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Silver is projected to face a widening supply deficit in the coming years, driven by surging industrial demand and constrained supply. Global silver demand is forecast to reach a record 1.2 billion ounces in 2024, the second-highest level on record.
Industrial fabrication, particularly in the photovoltaic and automotive sectors, is expected to drive a 4% rise in silver industrial demand to 690 million ounces in 2024. However, silver mine production is only projected to increase by 2% in 2024, while industrial consumption will climb by 4%. The global silver deficit is anticipated to widen by 17% to 215.3 million ounces in 2024.
Experts warn that the solar sector alone could deplete 85-98% of global silver reserves by 2050. As the silver market faces a structural deficit, prices are expected to rise to incentivize new supply and balance the market.
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AI (Artificial Technology) is expected to significantly impact the demand for silver in the coming years. The growing adoption of AI technologies, particularly in the green energy and electronics sectors, will drive increased industrial demand for silver.
AI-powered devices and infrastructure require silver for components like chips, capacitors, and circuit boards. Additionally, the surge in AI server and chip production to support the evolution of AI algorithms is predicted to boost silver demand for applications like silver-palladium multi-layer ceramic capacitors and gold bonding wire.
As a result, the silver market is forecast to grow beyond the photovoltaic sector and into a wide range of electronic devices, potentially leading to a surge in silver prices.
A simple way to invest in silver is through the silver ETF (SLV) which tracks the price of silver. There are many companies that also mine and use silver that can be found on the Levelfields AI platform.
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