Silver - a giant in slumber?

This piece was originally published in February, 2024 for Damped Spring.

Silver is not only a precious metal/store of value, but more importantly an industrial metal as well.

Let’s take a look at some drivers of silver demand and the supply situation

Silver uses

Silverware 6%, photography 2%, physical investment

27%, Jewelry 19% and the BIGGIE industrial applications 45% such as Solar panels, batteries, Automotive, healthcare

Supply/Demand

Via The Silver Institute

Silver demand is expected to hit 1.2 billion ounces in 2024. That would rank as the second-highest annual silver demand on record.

Industrial demand is expected to rise by 4% to a record 690 million ounces in 2024.  Photovoltaics (PV) and automotive industries will serve as the key drivers. Specifically, new, higher-efficiency N-type solar cells being phased in require more silver than older solar panel technology.

Resulting in a deficit of 176 million ounces on the heels of a 140 million ounce deficit in 2021-2023.

Silver in Solar Panels

Changes to solar panel technology are accelerating demand for silver, a phenomenon that’s widening a supply deficit for the metal with little additional mine production on the horizon.

Silver, in paste form, provides a conductive layer on the front and the back of silicon solar cells. But the industry is now beginning to make more efficient versions of cells that use a lot more of the metal, which is set to boost already-increasing consumption. 

Solar is still a fairly small part of overall silver demand, but it’s growing. It’s forecast to make up 14% of consumption this year, up from around 5% in 2014, according to a report from The Silver Institute, an industry association. Much of the growth is coming from China, which is on track to install more panels this year than the entire total in the US.

Silver in Automotive

Application-driven growth for silver in light vehicles In the initial decades of automotive production, silver’s use was relatively limited, being primarily used as connectors for power linkage in batteries, generators and alternators. Silver was also used in switches to control basic electric devices, such as headlights, windshield wipers, heating controls and early electronic systems, chiefly radios. From around the 1960s to the 1980s, vehicle sophistication rose considerably, with the widespread adoption of silver-bearing devices such as air-conditioning units. Fast forward to the present time, and the rapid development of semiconductor technologies has revolutionized the industry, with more complex electronics modules being rapidly introduced. The adoption of new technologies toward a safer, and ultimately more enjoyable, driving experience have triggered the implementation of more advanced electronic components and control units in each car. The increasing use of ECUs in particular is of pivotal importance to silver automotive demand. These are effectively micro-computers, which analyze data, control parameters and operate designated functions in a vehicle. With the rising complexity of control systems, and the increased need for device connectivity, an increasing number of ECUs are now used to control a wide variety of features.

Autonomous driving is becoming an increasingly exciting area for silver demand. There are six levels of AD, from 0 to 5 (defined by the Society of Automotive Engineers). The development of this technology over the past few years has boosted demand for ECUs and related silver-bearing components.

Hybrids use more silver than any other car and this market is growing in North America…faster then traditional EVs that are constrained by where charging stations are located and poor battery performance in colder weather

Batteries

Is Silver The Answer For Solid-State Cells? Samsung Thinks So

Samsung researchers describe all-solid-state battery with silver-carbon composite layer

The best lithium-ion cell for sale nowadays has around 670 Wh/l of energy density. You are probably aware of the many advantages a solid-state battery may offer to EVs, but what if it also had high energy density? Would 900 Wh/l be enough? This is what Samsung researchers managed to get with their most recent study.

The researchers from the Samsung Advanced Institute of Technology (SAIT) and the Samsung R&D Institute Japan (SRJ) have used a very thin silver-carbon film (Ag-C) in a prototype pouch cell. 

Silver zinc for energy storage is another one to watch…the tech has been around for a while, but The new battery is not quite ready to slide into an electric vehicle, but it does pave the way for a new generation of lighter, more efficient electronic gear, and better prospects for recycling, too.-InsideEV’s

Interest Rates and Silver Miners

Primary silver miners' costs higher year-on-year in 2023 due to higher interest rates as new mining projects count on a lot of financing and that financing is harder now.

Nominal & Real Fed Funds Rates and Silver Price

Silver prices have been surprisingly buoyant in the face of a significant tightening in US monetary policy.

If we are to see Federal Reserve cut rates this year, and a subsequent decline in USD, this could propel silver much higher.

DISCLAIMER: This material is presented solely for informational and entertainment purposes and is not to be construed as a recommendation, solicitation, or an offer to buy or sell / long or short any securities, commodities, or any related financial instruments. Please contact a licensed professional before making any investment or trading decisions.