With a growing popularity as a tech metal, silver is now considered a reliable option for those looking to invest in precious metals.
Demand for silver was particularly strong in the first half of 2021, and markets registered a 48% growth from June 2020 to June 2021.
But although price growth has slowed in the third quarter, analysts are suggesting that silver’s use as a critical metal for the “new energy” future that will help drive silver’s continuing demand growth and strengthen its price position.
That growth in demand has been reinforced in recent production figures.
The US Geological Survey (USGS) recently unveiled that U.S. mines produced 90,400kg of silver in June 2021. Based on unrounded data, the average daily silver production in June was 3,010kg, a 6% increase from the daily silver production of 2,840kg in May 2021, and a 20% increase from the daily silver production of 2,510kg in June 2020. For the first six months of the year, the average daily silver production in 2021 was 2,510kg, a 15% increase from the daily silver production during the same time period in 2020.
According to The Silver Institute, global silver demand is expected to achieve a six-year high of 1.025B ounces in 2021 – led by industrial and physical silver investment.
What is making silver particularly attractive as a tech metal is the fact that it is the best conductor of electricity due to the fact it contains a higher number of movable atoms (free electrons). For a material to be a good conductor, the electricity passed through it must be able to move the electrons; the greater the number free electrons in a metal, the greater its conductivity.
Silver rebounding
In a recent report, The Silver Institute said demand from the electrical and electronics sector is poised to account for the bulk of the forecast near-term gains. The report pointed to the growing penetration of 5G technology in consumer electronics as notable driver of gains for silver offtake, with a 7% increase over 2020 to 300Moz for silver’s use in the sector.
It also noted that the photovoltaic (PV) sector staged a strong recovery in the second half of 2020, and this momentum should carry through 2021. The global total for the sector is forecast at 105Moz in 2021, overcoming the losses sustained last year. Although silver loadings continue to drift lower, the sector will benefit from a growing number of countries that are installing new PV capacity.
According to the report, silver’s use in the automotive market should also rebound strongly in 2021, to just over 60Moz, benefiting from the growing electrification of vehicles.
“Going forward, the outlook for the silver price in 2021 remains exceptionally encouraging, with the annual average price projected to rise by 46% to a seven-year high of US$30.00,” the Institute suggested.
“Given silver’s smaller market and the increased price volatility this can generate, we expect silver to comfortably outperform gold this year,” it added.
Driving technological advancement
Silver is a particularly important component in the battery market, including its use in silver oxide batteries – a market that is forecast to continue to grow strongly in coming years.
According to The Silver Institute, the metal’s position as the highest related electrical conductor of all metals, has seen it become a component in almost all electronic devices we use daily.
The Institute says this has seen the precious metal labelled being not only vital today, but also for the next generation of technological advancements, especially those related to global connectivity expansion, will rely on the white metal’s inherent properties throughout the 21st Century.
It is forecast that the use of silver in electronics and electrical applications (excluding PV) will rise from 224Moz in 2020 to 246Moz in 2025, underscoring the metal’s role in emerging technologies.
A new Market Trend Report, “Silver and Global Connectivity,” produced by London-based CRU International Limited, has further highlighted the metal’s importance to global communications moving forward.
The report notes that:
The world is becoming more connected through the billions of physical devices that connect to the internet. Silver is playing an important part in providing increased access to information, global markets, and communication and, as a result, boosting productivity, reducing waste and inefficiencies, strengthening supply chains, allowing greater automation, and spurring economic activity. This is especially notable today as the COVID-19 pandemic has caused a dramatic uptick in the number of employees working and students learning remotely.
Radio-frequency identification devices (RFID) wirelessly connect objects for tracking, monitoring, and data collection. The logistics and supply chain industry has had high adoption of RFID tracking systems to monitor their assets through air, rail, road, or ship. Health care has also benefited by allowing workers to discover real-time location of life saving medicines and equipment. Projected usage of silver for RFID’s is expected to increase as much as 400% by 2030.
Silver is integral to applications used to forge connections across the globe. These include the expansion of 5G communications technology and the joining of once “unintelligent” goods to a greater ecosystem through the internet of things (IoT), the network of historically non-communicative physical objects that are now able to relay information. For example, silver is at the heart of many new technologies that establish reliable and instantaneous connections between people and a wide array of machines, appliances, and devices, including smartphones, white goods, and exercise equipment.
As global connectivity expands, each application will require various sensors, communication, tracking, and monitoring devices. Many of these applications will use silver in their semiconductors, electrical contacts, and elsewhere. In addition, the underlying infrastructure supporting this connectivity transition, such as the 5G network and the IoT, will contribute to increased silver demand.
Notably, silver offtake in electronics and electrical applications will benefit from the global green revolution’s need for additional power distribution to connect renewable power, off-grid energy storage, and increasingly, the installation of electric vehicle charging stations. For instance, according to the International Energy Agency’s Sustainable Development Scenario, the proportion of electricity generated globally from renewables will increase from 29% in 2020 to 49% by 2030.
