▌ Once regarded as a cheap substitute for gold, it had no special status. It is quietly transforming into a valuable resource in industry, and its value is not only due to being a metal but also because of its role in modern technology and industry, making it simply irreplaceable.
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1. The Identity Dilemma of Silver: Value in a Tight Spot
The identity dilemma of silver is actually its awkward position among commodities. Commodities can generally be divided into two categories: one is credit assets like gold, whose value mainly comes from financial demand and can maintain a certain level of demand even during economic downturns. The other is growth assets like copper and crude oil, whose prices are more influenced by economic cycles and industrial demand.
Silver happens to be positioned between the two. It has both financial attributes and widespread industrial applications. According to the 2024 World Silver Report, silver demand is roughly divided into three parts: 58% comes from industrial demand, mainly from manufacturing and high-tech sectors; 23% comes from jewelry and silverware, which are greatly affected by price fluctuations; and 16% is investment demand, primarily from investors buying silver bars, coins, etc.
This demand structure causes significant fluctuations in silver prices, which often follow the price movements of gold. In the past, the gold-silver ratio generally remained between 55-60, but in 2020 it once broke 90, indicating that the market has long underestimated the value of silver.
II. The Explosive Growth of Industrial Demand: Silver's Value Soars
1. Photovoltaics: Silver's First Indispensability
The photovoltaic industry is the biggest driver of surging demand for silver. In 2015, the global newly installed photovoltaic capacity was about 50GW, but by 2024, this figure has surpassed 400GW, an increase of more than 8 times. Although the photovoltaic industry is striving to reduce the amount of silver used per watt of photovoltaic modules, the tremendous expansion of installed capacity still far exceeds the decline in silver usage per watt.
According to the latest data, the demand for silver in the photovoltaic industry is expected to reach 198 million ounces in 2024, accounting for 17% of global silver demand, and this demand shows a long-term growth trend. Most importantly, the role of silver in the photovoltaic industry is irreplaceable, especially in terms of conductivity and stability, where silver outperforms other metals.
2. Electric Vehicles and AI Infrastructure: Irreplaceable Strategic Materials
In addition to photovoltaics, the demand for silver has been profoundly influenced by electric vehicles and AI infrastructure. Although the demand for silver per electric vehicle is higher compared to traditional fuel vehicles, the most significant factor is that electric vehicles and high-end electronic devices have a very strong dependence on silver, with very low substitutability.
In the electrical and electronics field, the demand for silver is expected to reach 461 million ounces in 2024, driven by high-tech equipment such as data centers and AI servers. This demand primarily reflects a strategic dependence on silver rather than a purely quantitative demand.
III. The Ceiling on the Supply Side: Silver's Difficulty in Increasing Production
The supply side of silver can hardly keep up with the rapid growth of demand. It is expected that the global silver mining output in 2024 will only be 820 million ounces, with virtually no growth. Moreover, over 70% of silver comes from by-products of other metals such as copper, lead, and zinc, whose production is more affected by investment cycles than by fluctuations in silver prices.
In other words, even if the price of silver rises, the response from the production side is very slow. Because the output of silver is closely linked to these base metals, the growth of silver supply is limited and cannot quickly meet market demand.
IV. The Supply-Demand Gap of Silver: From Cyclical Shortages to Structural Tightness
Historically, fluctuations in silver prices have mostly been caused by short-term volatility driven by financial cycles, but since 2021, the silver market has experienced a long-term supply-demand gap. The annual gap is approximately between 150 million and 200 million ounces, with a cumulative gap approaching 800 million ounces.
Currently, the global available silver inventory is only enough to support 1 to 1.5 months of consumption, far below the typical safety line of 3 months for commodities. This means that if a large amount of silver flows into key industries such as photovoltaics and electric vehicles, it may be very difficult for silver in the market to return to circulation, and the tight supply-demand situation will only become more severe.
V. The Future of Silver: No Longer the Shadow of Gold
Today, silver is no longer the gold of the poor. It is not just a cheap substitute for gold, but is gradually becoming an indispensable key material in various industries. The value of silver is no longer driven solely by financial investment demand, but is increasingly dependent on the unique functions of silver in key industries.
With the continuous increase in demand from these industries, the status of silver is changing from being dispensable to being essential. In the future, silver will no longer be a shadow in the gold market but will play an independent and important role, actively participating in emerging technologies and industries.
VI. The Rise of Silver Cannot Be Ignored
With the development of the global economy and technology, silver is undergoing a transformation from low value to strategic resource. Its applications in new energy, photovoltaics, AI, and other industries will undoubtedly make it a key resource that cannot be ignored in the coming years. Silver is no longer just reliant on the fluctuations of gold, but stands on an independent stage as an irreplaceable key material in the global supply chain.
This round of silver's rise, although fraught with risks, is undoubtedly a huge opportunity.
