The Rising Demand for Silver in the New Economy

Increasing Demand for Silver

The demand for silver is on the rise, with technologies like solar power and artificial intelligence (AI) driving the surge. In 2023, the silver market saw a 15% supply deficit. Moreover, the market is projected to hit a cumulative deficit of 1,093.4 million ounces from 2020 to 2024. This data is according to a graphic by Outcrop Silver, which was discussed by Bruno Venditti of Visual Capitalist. He emphasized the need for new mines to cater to the high demand for the metal.

Silver's Role in Emerging Technologies

Sprott reports that silver is second only to oil as one of the most widely used commodities, with over 10,000 applications globally. The metal plays a crucial role in photovoltaic cells used in solar power, with an average solar panel requiring 20 grams of silver. Electric vehicles also utilize between 25 and 50 grams of silver. Moreover, silver is vital for semiconductors, controls, sensors, and LIDAR technology in AI-enabled transport. In healthcare AI, conductive silver nanoparticles are used in wearable electronic skin patches. Notably, the average cell phone contains 0.34 grams of silver.

Potential Supply Gap Risks

Despite the significant role of silver, the industry is facing challenges with declining ore grades and depleting reserves at existing mines, leading to reduced metal output. The industry also suffers from a lack of investment in primary silver mines. Currently, over 70% of silver is mined as a byproduct of gold, copper, and other metals. Furthermore, production is heavily concentrated in three countries—Mexico, Peru, and China—which collectively account for half of the global silver production.

Looking Ahead: The Future of Silver

Given the current circumstances, new mines will be necessary to meet the increasing demand for silver. Outcrop Silver is rapidly advancing the Santa Ana high-grade silver deposit in the Mariquita District, renowned as the highest-grade primary silver district in Colombia. This district is known for its historic silver grades, which are among the highest in Latin America. The Indicated Grade for the Santa Ana project is ranked the second highest in the world.

Bottom Line

The increasing demand for silver, driven by its integral role in emerging technologies, paints a promising picture for the metal's future. However, the potential supply gap and the concentration of production in a few countries pose significant challenges. What are your thoughts on this rising demand for silver and the potential supply gap? Do you think new mines will be able to keep up with the demand? Share your thoughts and this article with your friends. Also, remember to sign up for the Daily Briefing, which is available every day at 6 pm.