Here’s Why Silver and Solar Are Taking Off
As silver markets roar, solar power is heating up. Here's why the two are moving together and what you need to know...
“By and by I was smitten with the silver fever.....The "Ophir" had been worth only a mere trifle, a year gone by, and now it was selling at nearly four thousand dollars a foot!” - Mark Twain, Roughing It
Twain had the silver bug in his semi-autobiographical travel book, Roughing It. As silver findings enticed settlers to the American “West,” the price of silver soared to $2.94 an ounce in 1864. The first discovery of precious metals in the Comstock Mining District of Nevada, known as the Ophir Silver Mining claim, was in 1859.
The Nevada Silver Rush grew on the heels of the more popularized California Gold Rush.
Since those heady times in U.S. history, the price of silver per ounce in dollars has ranged from 25 cents during the Great Depression to nearly $50 in early 1980 and the Spring of 2011.
The World Needs More Silver
Fast forward to today, and we will round out the fifth year straight of a silver shortage.
In 2023, silver demand outpaced supply, leading to over 142 million ounces in a shortfall. This deficit could double to 265 million ounces by the end of 2024, as shown below.
Silver Supply (Orange) and Demand (Green), 2019-2024
Silver has three things going for it – wealth preservation, dollar diversification and use value.
Silver demand has historically been split evenly between investment (including jewelry) and industrial use. However, recent industrial demand has surged. This year, industrial demand constituted 64% of all global silver demand – a 19% increase relative to last year.
The main drivers for that change are the global energy and technology transformations. The solar energy, artificial intelligence (AI) and electric vehicle (EV) sectors drove much of the boom, with a real co-dependence emerging between all three.
Energy is playing an escalating role in silver’s shine.
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The World is Going Solar
According to analysis from the think tank Ember, the world could reach 593 GW of solar installations by the end of 2024. That’s the equivalent of the total energy footprint of a country like Germany or Japan. That projected growth reflects 29% more solar capacity than in 2023, following record solar installation growth of 86% in 2023 compared to 2022.
The International Energy Agency reported that global investment in solar photovoltaic (PV) manufacturing doubled last year to around $80 billion. That constituted a massive 40% chunk of all global clean-technology and manufacturing investment.
China, the largest user of solar energy, more than doubled its investment in solar photovoltaic manufacturing in 2023 over the previous year while heavily subsidizing its solar production.
That’s one reason the U.S. Commerce Department just slapped new tariffs on solar products from Southeast Asia with direct connections to China – all in an effort to keep the playing field level.
What you should know is that India, the only other country on earth with a population of one billion, is gaining ground in the solar race.
India’s Solar Boom is Driving its Silver Demand
India is the world’s largest silver consumer.
During the first half of 2024, India imported over 4,554 metric tons of silver. That was more than its total silver imports for 2023. If India continues at that pace, it will more than double last year’s 3,625 metric tons of imports.
Why all that silver? The sun.
India is the third largest solar power-generating country in the world.
India’s solar industry is shifting to more advanced, high-efficiency solar cells. Those require greater silver content. Silver is an integral piece in producing solar PV panels. That’s because silver has high electrical conductivity, thermal efficiency and optical reflectivity properties.
Leading India-based companies like Tata Power and Reliance Industries are fast-tracking solar panel manufacturing. That fast-track signals even greater demand for more silver is ahead.
But it’s not just China and India experiencing a solar boom.
American Political Power Likes Solar
The U.S. has also experienced major growth in solar energy over the last decade. Today, about 210 GW of solar capacity installed across the country. Solar power provides enough energy to power an estimated 36 million homes.
As in other countries, the U.S. solar industry has been buoyed by favorable government policies. Those include federal legislation like the Inflation Reduction Act and the Investment Tax Credit (ITC), which offers dollar-for-dollar credit expenses in renewable energy sources like solar energy and covers a given percentage of total project cost.
Those subsidies helped cut installation costs, which, in turn elevated solar power demand.
What you should know is that just as bipartisan support for nuclear power exists, the same goes for solar energy. That means solar wins no matter who secures the White House after the election.
The Biden-Harris administration passed the bipartisan Inflation Reduction Act, with Vice President Harris casting the deciding vote. It contained billions of dollars of clean energy tax credits. These ignited solar and storage deployment, domestic module manufacturing capacity, and new tab openings.
Meanwhile, former President Trump said he was a "big fan" of solar during the September 10th presidential debate. In 2020, the Trump Administration also invested millions of dollars into renewable energy efforts for rural communities like Minnesota and Georgia.
And even in an election year, the U.S. installed a record 9.4 GW of solar power in the second quarter of 2024, following a record 11.8 GW during the first quarter. Solar power accounted for 67% of all new electricity-generating capacity added to the U.S. grid in the first half of the year.
Utility-scale capacity comprised much of that increase. That means big utilities are big on solar.
The solar power boom will continue to drive silver’s price higher. That’s because solar and silver are joined at the hip for the near and long term.
To take advantage of this continued global solar energy trend, we recommend that you consider the Invesco Solar ETF (TAN). The ETF includes major solar industry companies like First Solar, and it allocates nearly half of its fund to U.S. companies.
Great article!
The demand for silver and copper seem destined to rise further. Do you have recommendations for miners with significant projects in these metals? Seabridge Gold Inc (SA) seems to be a great recommendation with its gold/copper reserves. Are there other silver/copper projects you would suggest I look at?