Determining the supply and demand for any commodity is an important first step for any trader or investor, especially those who buy silver and gold. Among the major factors affecting long-term value are of course, 1) the degree to which demand is increasing and the 2) ability of supply to meet that demand. Advances in green energy technology, specifically solar energy and photovoltaic (PV) technology, are creating a new industrial demand for silver.
Decreasing Supply of Silver Over Time
Buyers of silver understand that demand has exceeded new production for decades. Silver was produced in abundance due to new finds and technology up until WWII. In fact, although the metal was vital to the war effort, there was a surplus of approximately 10 billion ounces at that time.
However, the world’s supply of silver had decreased to less than 1 billion ounces in 2010, and the inventory has continued to decline. 1 This has occurred while the world’s population (all consumers of silver) has more than tripled to 7.5 billion during the same time period. In fact, if the digital world had not replaced silver-based photographic needs, even the current inventory might have been consumed long ago.
Green Energy Technology Creates More Demand for Silver
New industrial demands for silver and its unique properties have arisen. These increases in demand include many eco-sensitive applications, including photovoltaics. 2 This is the chemical process whereby sunlight is turned into electricity, and is the fundamental concept that makes solar panels possible. The use of silver in this process is essential, making silver an integral part of the growing demand for green energy alternatives.
Each average solar panel requires 20 grams, or two-thirds an ounce, of silver. Contrast this with cellphones and laptops, each of which uses only 200 milligrams to just 1 gram of the precious metal. This usage has created a steadily growing consumption of silver, with more than 60 million ounces consumed for PV applications in 2011 alone. 3 According to the Solar Energy Industries Association, the demand for solar panels is growing rapidly as a result of the drop in the unit prices due to production volume savings.
Photovoltaic Technology Opens New Doors
Important for both the renewable energy field and those who invest in silver, the role of photovoltaics goes far beyond solar panels. The relationship to lowered production costs and increasing demand is moving the use of photovoltaics (and the silver it requires) into many new applications and technology variations.
At a conference just last month (March 2016), the director of the Energy Department’s National Renewable Energy Laboratory (NREL), stated, “PV is on a pathway to low cost…When you add PV to inexpensive storage or another means of introducing flexibility into the grid, PV can be attractive as a primary energy source.” 4
Has the Silver Market Not Yet Factored in PV?
Many analysts and silver buyers who have studied the growth of PV demand believe the market has failed to factor in this significant new source of extreme demand. With ongoing breakthroughs, PV’s increasing use in the alternative energy business will increase its piece of the already-existing multitrillion energy market.
1 – https://www.butlerresearch.com/a_permanent_shortage_of_silver.html
2 – https://www.caseyresearch.com/articles/look-out-silver-here-comes-solar-demand
3 – https://www.caseyresearch.com/articles/look-out-silver-here-comes-solar-demand
4 – http://www.nrel.gov/news/press/2016/24666