The resurgence of silver's popularity is imminent due to various factors.
In a dynamic shift that promises to reshape the global market, the demand for silver is expected to surge significantly beyond 2023, driven by sectors such as solar energy and India's industrial needs, as well as broader decarbonization efforts.
One of the primary drivers of this increased demand is the solar photovoltaic (PV) sector. Each solar panel requires approximately 20 grams of silver, making it a major contributor to the overall demand. As the global push towards renewable energy continues, this demand is expected to remain robust, contributing to higher silver prices. The growth trends in the solar industry indicate a strong increase in silver demand, which supports higher prices due to limited substitution possibilities.
Decarbonization initiatives worldwide are another key factor driving demand for silver. The transition to electric vehicles (EVs) and battery technologies also drives silver demand, further fueling market pressure. This trend is likely to continue, contributing to upward pressure on silver prices.
India's industrial sector is another potential contributor to the increased demand for silver. While the demand for silver in India is primarily associated with jewelry, the country's growing industrial sector could also play a significant role. However, the primary drivers remain the global industrial and renewable energy sectors rather than Indian jewelry demand alone.
In the short term, from 2023 to 2025, the strong industrial demand, particularly from the solar and EV sectors, is expected to maintain a price floor for silver even during market downturns. Investment demand can further increase prices during bull markets. Beyond 2025, the ongoing growth in renewable energy and industrial sectors will likely sustain or increase silver prices. The limited ability to substitute silver in these applications ensures constant demand, supporting price stability or growth.
Investors can participate in rising silver prices using the non-currency-hedged silver ETC (WKN: A0N 62F) from WisdomTree, with a fee of 0.49% per year. Industry experts expect a slight supply deficit in silver in 2022, which could worsen in 2023 as the trend towards decarbonization continues. Precious metals provider Bullion Vault expects short-term silver prices to rise.
Silver prices have fallen by nearly a quarter in U.S. dollars since April 2022. However, DZ Bank's Marcus Landau suggests that a bottom seems to have formed in silver prices at around 18 U.S. dollars per ounce. Global demand for silver from the solar industry is expected to increase by 12% in 2022 to 3,950 tons. In India, the wedding season is starting, leading to increased demand for silver as a cheaper alternative to gold.
Silver is increasingly in demand in the automotive industry for electric mobility due to its excellent conductivity. More than half of the world's annual silver production is consumed by industry, with the solar industry currently accounting for around 15% of global annual silver production, a proportion that is rising.
China is significant for silver demand, with PV module installations increasing in 2022 despite weak economic growth. Global demand for silver from the solar industry grew by 13% in 2021 to a total of 3,545 tons. Commodity experts at Commerzbank see significant catch-up potential for silver in 2023. Importers in India are willing to pay high sea freight costs to import silver directly due to high demand. The Indian government has increased import duties on gold but kept them unchanged for silver.
In conclusion, the combination of strong industrial demand, particularly from renewable energy sectors, and decarbonization efforts positions silver for potential price increases beyond 2023. This trend is expected to have significant implications for the global silver market.
Finance plays a crucial role in the anticipated increase of silver prices, as global demand, driven by sectors like solar energy and industrial needs, shows no signs of slowing down. Investing in silver could be a lucrative option for those seeking growth opportunities, with the non-currency-hedged silver ETC (WKN: A0N 62F) from WisdomTree acting as one avenue for potential returns.
