A global transition to clean energy should shine a light on silver’s long-term prospects. Solar power demand, in particular, should prop up the need for silver moving forward.
Silver prices are up almost 30% for the year, though the metal has taken a breather from its rally in the past month. For the long-term investor, it’s an ideal time to buy the dip as its growth prospects look promising. This is especially so when considering the demand for solar power on a global scale.
“Last week, the UK’s National Energy System Operator (NESO) called upon the UK government to have 47 GW of solar capacity in the UK by 2030,” noted analysts at Heraeus. “UK solar capacity reached 17 GW as July 2024 drew to a close (source: Department for Energy Security and Net Zero). Recorded capacity in July 2024 was 1.2 GW higher than in July 2023, so to meet the aspirations of NESO the UK must increase its annual rate of solar deployment by nearly four-fold.”
“Global capacity additions this year are forecast to be 550-600 GW compared to 2023 when 447 GW was installed,” the analysts added. “Worldwide total demand for silver was 1,195 moz in 2023, of which photovoltaics consumed 14%. Total demand is expected to rise modestly to 1,200 moz in 2024. However, this increase in demand from the solar sector could push overall demand higher in 2024.”
Silver's Market Flexibility
Silver can also serve a purpose as a store of value for investors looking to add precious metals to a portfolio. The dual aspect of being an industrial metal and precious metal adds flexibility to silver versus gold.
If market momentum appears to favor a risk-on sentiment, demand for precious metals may falter. Easing monetary policy could help buoy demand, but silver can always fall back on its use as an industrial metal.
“Silver is an industrial metal and it’s not as if central banks are suddenly going to tighten monetary policy again,” FX Empire noted. “So, loosening monetary policy typically will be good for metals, and I think silver will continue to see some interest based on that alone.”
The Sprott Physical Silver Trust (PSLV ) provides exposure to the precious metal without the additional hassle of storing it. It invests in unencumbered and fully allocated London good delivery silver bars. Additionally, shareholders can redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions) if they want a more tangible investment experience.
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