Investing In Silver: Diving Deeper into Demand, Deficits, and Risks

Silver At The Crossroads

Precious metals have been the refuge to which capital flocks in troubled times since the dawn of civilization. In large part, this is because they represent a form of wealth that is independent from the monetary or financial system.

And for sure, gold seems to have been playing this role in the past few years since the explosion of international tensions following the start of the war in Ukraine. Tariffs and international trade with the US slowing down also contributed.

Fuente: Precio de oro

The cheaper relative of gold, silver, is also outperforming, reaching in nominal terms (not inflation-adjusted) its all-time highs from the 1980s.

However, concerns about inflation, geopolitics, and monetary disorder are only part of the story with silver. What was historically a metal mostly used in jewelry and coinage is today a crucial industrial metal, notably for electronics, and the cornerstone of the green energy revolution, with solar panel production now a major driver of silver demand.

Another part of the story is that production of fresh silver from mining is struggling to keep up with demand, depleting inventory over time.

So while not as talked about or valuable as gold, silver might have as much or maybe even more upside potential as the yellow metal.

What Is Silver? Properties, Uses, and History

Silver is a gray metal known since antiquity, believed to have been discovered around 5000 BC, with the first jewelry and silver objects made in 4000 BC.

For a long time, silver’s value was comparable to that of gold, with the ratio between the two metals varying depending on the region of the world and the respective abundance of ore in that area.

Since the end of the direct monetary role of gold and silver in the global monetary system, the silver-to-gold ratio has fluctuated, with silver becoming less precious than gold over time.

Fuente: Aberdeen Investments

For this reason, silver coinage was common and represented a form of money in most of human civilization.

Silver is ranked chemically in the same category as copper and gold.

Fuente: Priam Study Center

It shares with these metals a few key characteristics and some unique ones of its own:

• Very high conductivity, with the highest electrical and thermal conductivity of all elements.
• It has high malleability and ductility (deforming without breaking), allowing for ultra-thin sheets and layers.
• It is the most reflective element (polished silver reflects 95% of the visible light spectrum).
• It acts as a disinfectant able to kill bacteria, viruses, and fungi by damaging their cell membranes, interfering with their metabolism, and DNA.

Where Does Silver Come From?

Silver deposits are unequally distributed on Earth, with the largest ore resource in Latin America, notably Mexico, Peru, and Chile. Production is also strong in China, Russia, Central Asia, Australia, and the USA.

Some of the top-producing countries have more or less concentrated deposits, with notably Mexico having several mega-ore deposits, and 10 out of the top 20 largest silver mines in the world.

Fuente: Visualizaciones de minería

Silver mining costs vary widely by region, with some areas like Oceania and Asia with an AISC (All-In Sustainable Cost) of $8-$9/ounce, versus CIS (Russia and former USSR countries) or North America’s AISC as high as $17-$19/ounce.

In all cases, with silver trading above $40 in mid-2025, this price surge made silver mining a high-margin activity in all regions, for the first time in decades.

Fuente: Voronói

Only a minority of silver production comes from dedicated mines, as the metal is often found mixed with other minerals. Around 2/3^rd of the silver obtained today is a by-product of copper, lead, and zinc mining, making its supply relatively inflexible.

Another “production” source is silver recycling, providing almost 200 million ounces per year of supply.

Fuente: Instituto de plata

Recycling tends to go up a little when prices are higher, but a lot of the unrecovered silver is lost due to technical reasons or too low concentration, and price fluctuation does not change that fact by much.

Silver Price History and Cycles (100-Year View)

Silver prices have been fluctuating widely when considered over a long period of time, with bull markets often coinciding with monetary shocks and periods of inflation, like in the 1970s after the US abandoned the gold standard.

Fuente: Visualizaciones de minería

Silver is a relatively small market, with only $87B market size in 2024, making it significantly smaller than the gold market’s $291B.

The difference between the two precious metals is even larger when considering the above-ground inventory of both. Total gold available is estimated at a value of $24.7T, mientras silver global inventory is only worth $2.3T.

Market Manipulation Cases in Silver (Hunt Brothers, JPMorgan)

The silver market’s small size makes it more susceptible to manipulation, with a notable episode being the attempt by oil tycoon Hunt’s brothers to create a short squeeze and corner the silver market in the 1980s.

Se drove silver prices from around $6/oz in early 1979 to nearly $50/oz by January 1980, chartering Boeing 707 cargo planes to fly tonnes of silver bars to Swiss banks; but the manipulation failed when they were unable to pay a large margin call of $134 million.

En 2020, JPMorgan paid a $920 million fine for manipulating the silver and gold markets for years, this time driving the price artificially lower.

This led many financial analysts to discuss the fairness of the silver spot price, considering past manipulations that went on for years at times.

Silver Demand Drivers

Silver demand can be split between 2 categories: industrial uses and other uses.

The industrial uses cover industries such as electrical and electronics, solar panels (photovoltaic), alloys, and other applications like medical devices and treatment, or mirrors.
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The other uses are more related to the perceived value of silver alongside gold, whether it be jewelry, silverware, or investment forms like coins and metal bars.

Distinguishing industrial demand from other sources of demand is important, as it is mostly destructive, with very little of the silver used this way ever recovered or recycled.

Up to 90% of all silver produced historically has been lost to either corrosion or non-recoverable industrial uses.

Silver Industrial Demand

Fotovoltaica

While investment-driven demand has grown since 2020, after a slump in the late 2010s, it is industrial demand that has grown the quickest in recent years.

This was driven primarily by growing production of solar panels, with demand from this industry up 289% since 2015.

In practice, every solar panel contains around 20g of silver (0.7 ounce), forming fine grid-like patterns known as “fingers” and “busbars” on the surface of solar cells.

Silver powder is turned into a paste, which is then loaded onto a silicon wafer. When light strikes the silicon, electrons are set free and the silver – the world’s best conductor – carries the electricity.

In general, as solar technology has evolved and increased the production of electricity per solar panel, more silver has been used.

Fuente: Mining.com

As silver represents today more than 10% of a solar panel’s price, alternatives are being explored.

“Technologies that use cheaper metals are now sufficiently advanced, and will soon be put into mass production once silver prices surge.”

Zhong Baoshen - Chairman of Longi Green Energy Technology, the world’s biggest solar panel manufacturer.

Likely, none will have silver’s remarkable thermal and electrical conductivity, but the price difference might be worth it economically.

So as prices rise durably above $30/ounce or even $40/ounce, this might put a limit on how much more solar panel production will increase silver demand.

“Substitution will look more interesting when silver’s at say $30 an ounce as opposed to $22 to $23.”

Philip Klapwijk - Managing director of Hong Kong-based consultant Precious Metals Insights Ltd.

Electrificación

The rising demand for electrical and electronic applications, up 78% since 2015, is in large part related to electrification and batteries. In this application, silver’s resistance to corrosion (compared to copper, for example) and the fact that it is lightweight are as important as its electrical conductivity.

So EVs’ deployment is impacting silver consumption as well, and an entire car consumes barely as much silver as two solar panels.

Battery electric vehicles use between ~25-50 grams of silver per electric vehicle.

As contrary to solar panels, silver is only a small percentage of the total cost of an EV, making its substitution by other materials less likely.

With many countries now heading for car sales percentage of hybrids and EVs above 20-30%, or even >50%, especially in Asia, thanks to cheap Chinese EVs, this source of demand will only grow.

Fuente: Jostein Hauge

In addition, new battery chemistries like Samsung’s silver-based solid-state battery could increase silver consumption much further by EVs if they become one of the standards of the new generation of EV batteries.

Silver Electronics & AI

Silver is also used in small amounts in countless electronics components in everyday products, including fuel cars (airbag deployment systems, automatic braking, infrared radars, LIDAR, etc.) with conductive pastes in automotive glass, circuit-breakers and fuses, switches, and relays used to activate varying electronic devices.

Silver is also used in power generation and distribution for electrical contacts in switches, transformers, relays, and capacitors.

This means that the increasing digitalization and AI growth, with associated data center build and electrical power consumption increase, will also become progressively a larger driver of silver demand.

Otros

The first historical use of silver, photography, is still ongoing, although it is slowly declining, having been overtaken by digital pictures.

Silver is used in healthcare for antiseptic bandages, catheters, dental amalgams, and disinfectants, but also for hearing aids, X-ray films, and other medical devices.

Silver-based alloys are used in soldering for strong, corrosion-resistant joints in various industrial applications. Silver is also a catalyst for various chemical reactions.

Radio Frequency Identification Device (RFID) chips with their tiny, thin antennas made of sprayed-on silver, are replacing bar codes on many items in supermarkets and supply chain inventories. Slender silver wires can also be used as filament feed for 3D printers. Mirrors in telescopes, microscopes, and other optical instruments make use of silver’s high reflectivity.

Silver is also used in cloud seeding, a technology used to cause clouds to produce rain and try to control hurricanes.

Precious Metal Demand

Often dubbed the “gold of the poor”, silver has been used all over history as a precious metal more accessible to buy for the lower and middle classes, to whom gold might be too pricey.

This perception of “discount” gold, as well as the beauty of silver, is the driver behind the demand for jewelry, silverware, and investment purposes.

Production of silver jewelry and silverware is mostly done in India, China, and Italy.

Fuente: Instituto de plata

Silver Supply Deficit

Since 2020 and the explosion of solar panel production volumes, silver demand has outpaced production. This results in depleting available silver supply, with global inventory down by almost 400 million ounces since 2021.

Fuente: Sprott

“The University of New South Wales forecasts the solar sector alone could exhaust between 85–98% of global silver reserves by 2050.”

Of course, such forecasts are difficult to make as photovoltaic technology is evolving rapidly, and silver prices have been highly volatile. And if photovoltaic consumption declines, new demand from batteries or AI could upend the market anyway.

Still, it seems that at the same time as demand for silver stockpile increases, mostly from investment demand, the existing stock is being increasingly consumed by various industrial applications, as mining fails to produce enough quantities.

Investing In Silver

Investors can get exposure to silver through three main channels:

1. Direct investment in silver metal
2. Investment in silver ETFs and other financial instruments,
3. Stocks of silver mining companies.

Lingotes de plata

This is certainly the most direct way that you can get involved in the silver market. The purchase of silver bullion, or actual silver bars and coins, is relatively easy, and there are a number of trusted outlets from which you can purchase. Investment-grade bullion typically refers to silver that’s 99.9% pure.

You should, however, remember that this is the most illiquid way to invest in silver, and each purchase of physical silver will have a slight premium added, as well as the storage costs you may incur.

Collectibles and rare coins will usually cost a higher premium than “commoditized” forms of silver bullion like the Filarmónica de Viena, Águila de plata americana, o el Hoja de arce canadiense.

Fuente: Bóveda de lingotes

Sellers of bullion and advocates for the purchase of silver metal will often recommend storing precious metal coins and bars in dedicated storage facilities, and not with banks or other financial institutions, to reduce counterparty risks.

We recommend these companies for bullion purchase:

1. Bitpanda (Estados Unidos prohibido)
2. Corredor de oro
3. Bóveda de lingotes

Silver Financial Instruments

ETFs & ETCs

Some exchange-traded commodity (ETC) and exchange-traded funds (ETFs) are financial instruments created to invest in silver metal and track the price of silver, without having to bother with direct custody and storage of the metal, in exchange for a low fee.

Among the largest ones are:

• iShares Silver Trust (SLV + 1.13%)(total Expense Ratio of 0.50%).
• iShares Plata Física ETC , for European investors (total Expense Ratio of 0.20%).
• abrdn Physical Silver Shares ETF (SIVR + 0%)(total Expense Ratio of 0.30%)

Opciones y Futuros

Silver options and futures are financial instruments used to speculate or hedge against fluctuations in the price of silver.

Usually, more than 5,000 ounces are traded at once, making this mostly a tool for experienced traders and not a good method for most retail investors to get exposure to silver.

It is also more of a short-term form of investment in silver (trading) than a long-term investment.

Silver Miners ETFs

As silver miners make most of their money from the differential between production costs and spot price, sufficiently rising silver prices can double, triple, or more their operating margins.

As a result, investors might be interested in getting exposure to silver miners as a way to invest in silver with a “built-in leverage”.

They might, however, diversify risks by investing in many companies at once, using dedicated ETFs for this purpose. Among some of the larger silver miner ETFs can be mentioned:

• Global X Silver Miners (SIL + 2.11%)
• Amplify Junior Silver Miners (SILJ + 2.24%)
• iShares MSCI Global Silver Miners (SLVP + 3.03%)

Silver Royalties Companies

The inherent risks in developing a new mine mostly limit investors’ choices between smaller, riskier companies and a few massive giants with slow or no growth. This is especially true for gold and silver mining.

This is why a new model emerged: the royalty company. The royalty model differs from direct investment in miners in a few key ways.

It provides capital, but not in exchange for shares or partial ownership. Instead, it will make money from a percentage of future sales linked to the future mining activity.

Para el compañía minera, avoiding shareholder dilution, including that of the founders, is very attractive.

<font><font>Para Inversores</font></font> in the royalty company, it allows for diversified risk. Because this is a better deal for the founders than issuing shares or licensing agreements, the royalty company can also negotiate more favorable and profitable terms than with share purchases or loans.

Royalty companies are remarkably lean organizations, often having less than 100 people on their payroll. The consequence is that once royalty money comes in, they can reinvest or distribute in dividends 80-90% of the income stream.

The royalty business model has been very successful with gold, with companies like Wheaton Precious Metals (WPM + 0%) or Franco Nevada (FNV + 2.15%), which also usually deal with some revenues from silver as well.

Royalty companies that are more focused on silver specifically are Silver Crown Royalties (SLCRF), with royalty streams from properties all located in the Americas (mostly South America), or Vizsla Royalties (VROYF), whose main royalty stream comes from Mexico.

Silver Stock

Corporación Panamericana de la Plata

Investors interested in directly betting on a silver mining company might do best by finding the right mix of geographical diversification, premium mining jurisdiction, and production growth, as they are going to want to capitalize on the long-term rise of silver prices.

In that respect, Pan American Silver is a solid option, having all its mines in the Americas. Not one country dominates the company’s mining activities, with the largest one (Chile) accounting for only a quarter of the whole operations.

Fuente: Corporación Panamericana de la Plata

Pan American Silver produced 21.1 million ounces of silver and 892,000 ounces of gold in 2024.

The company’s mineral reserves include 452 million ounces of silver and 6.3 million ounces of gold, or, at the current production rate, at least 21 years of silver reserves and 7 years of gold.

It has grown rapidly through a series of mergers and acquisitions, with the most recent being Mag Silver for $2.1B, as well as organic growth from exploration and development, making it today one of the world’s largest silver producers.

Fuente: Corporación Panamericana de la Plata

Since 2010, the company has dedicated 32% of its capital allocation to dividends, 7% to share buybacks ($1.1B returned to shareholders), and 47% to growth, illustrating its commitment to long-term value creation.

Future growth in the long-term could come from new projects the company already owns, but needs to build the mining infrastructures, like the Navidad deposit in Chubut, Argentina, one of the world’s largest undeveloped primary silver deposits, with up to 632 million ounces of silver.

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