5 Reasons Why Green & Silver May Be the New Black & Gold
By: Peter Turner
Tags: Data Science, Renewable Energy, Money, Solar Energy, Investing

5 Reasons Why Green & Silver May Be the New Black & Gold

How the Green and 4th Industrial Revolutions could mean interesting prospects for the White Metal in the future

This post is based on another post I wrote for Towards Data Science, see the original post here.

1. Dwindling Supply

The global Silver supply (which comes mainly from mines) has been declining over the past several years; this can largely be attributed to low Silver prices — the low silver price means that Silver mines have been struggling to operate at a profit — leading to them committing less-and-less capital into exploratory projects and into increasing production. A spike in the Silver price could, therefore, prompt increases in supply, but this would take time.

Total Global Silver Supply by Year since 1977 (GoldSilver Blog Post, CPM Silver Yearbook)

Historical Silver Prices per year since 1969 (macrotrends.net)

2. Silver’s Physical Properties Make It Great for Solar Power

Silver is interesting as a precious metal, in that its demand extends far beyond merely its use as jewelry and as a store of value — rather, its physical properties make it highly sought after in industry.

Thermal & Electrical Conductivities of Several Metals (Left), and Silver Nanoparticles Biocide Solution (Right)

Silver has the highest electrical and thermal conductivity of any metal on the face of the Earth. Not only this, but the metal is also a rather well-known biocide — meaning: it kills bacteria. (Note that resistivity is the reciprocal of conductivity).

Silver has the highest electrical and thermal conductivity of any metal on the face of the Earth.

These properties — Silver’s high electrical conductivity in particular — mean that Silver is a very useful material to use in all sorts of electronics, including…Photovoltaic Solar Panels.

Silver is used extensively to produce solar panels

But two factors provide a definite threat to the unbridled increase in Silver demand due to solar: namely, thrifting and other-technology-related efficiency increases.

Thrifting is the process by which manufacturers try and cut down the amount of silver used so as to cut costs. Indeed, the amount of silver needed to produce a conductive silver paste for the PV industry may be almost halved — from 130mg per cell in 2016, to 65mg by 2028 — this is according to the report, on behalf of the Silver Institute. The amount of silver has already decreased to a much larger extent, from 400 to 130 mg from 2007 to 2016.

Below is the total global solar energy consumption, per year since the 1960s:

Total World Solar Energy Consumption, Per Year

And here is the amount of Silver used in Solar cells, a good visual representation of thrifting:

Silver Loadings in Solar PV Production, Per Year (The Silver Institute)

If we assume that that the Solar-Silver demand is directly proportional to both the Silver loadings, and the amount of Solar consumption —and forecast, scale, and combine the above graphs, things get interesting:

Proxy for the Solar-Silver demand, based on Global Solar Consumption & Silver Loadings per Solar Cell? Please leave comments if my logic has failed me!

Anyway. What it looks like, if that graph is to be trusted, is that we are at a turning point for the Solar-Silver demand. If there is indeed a physical limit to the amount of silver that will continue to be used in solar panels, then it seems that — assuming an increase of solar consumption equal or similar to our forecast — the demand for silver from the solar industry will begin to climb relatively rapidly in the future, particularly when it reaches this limit.

What it looks like, is that we are at a turning point for the Silver demand due to PV Solar.

Of course, some brainiac could always come up with a Solar panel design that doesn’t need Silver — but, judging my Silver’s physical conductive properties, and the fact that the Photoelectric effect (by which Solar panels generate energy) was thought up by Einstein himself, I am taking my chances — at least for now.

3. The Internet of Things

Buzz words or phrases are thrown around a lot these days, two of these phrases — “Internet of Things/IoT” and “The Fourth Industrial Revolution” —have enjoyed a comfortable position in the ‘Buzzword Top 10’ for a good while now.

I think that it is safe to say that electronics are here to stay and that electronic devices will certainly become more numerous in years to come (if recent years is anything to go by).

This is interesting because Silver’s global demand is driven primarily by industry, and Silver’s industrial demand is actually driven primarily by the electrical & electronics sector:

Global Silver Demand by Sector, by Year

Total Industrial Silver Demand by Industry, by Year

So if the number of electrical & electronic devices increases, it is a fair assumption that the Silver demand from this sector will too. This is, again, reliant on our hypothetical brainiac not inventing some material alternative to Silver — for use in these devices.

4. The Next Global Economic Downturn

According to several, prominent figures — such as billionaire investor and hedge fund manager Ray Dalio, and Michael Burry, the man who successfully predicted the 2008 housing market bubble — we are nearing another economic downturn.

According to Ray Dalio, The Economy is the Result of the Accumulation of Three Forces — watch on YouTube

Burry, in fact, has said that a downturn will be due to the fact that we may currently be in an ‘index bubble’, that which is similar in nature to the housing bubble in 2008:

“Passive investments are inflating stock and bond prices in a similar way that collateralized debt obligations did for subprime mortgages more than 10 years ago, Burry told Bloomberg News.” — Michael Burry, September 2019

Now I don’t know whether we are, indeed, in a bubble or not. Nor how far away the next downturn/recession is. But I do assume that we haven’t had our last one; and what happens during an economic downturn? The answer is that investors flock to precious metals — like Silver — and this would mean a gargantuan increase in the Silver demand.

5. (Near)Future Technologies

The future holds some exciting new prospects, innovations, and technologies — many of which could make good use of Silver, again due to its excellent physical properties.

Electric Vehicles

I know that Electric vehicles are not a technology of the distant future, and are indeed here already; but they definitely still have a lot of room in the market, into which to grow.

Due to its high electric conductivity, Silver is widely used in and around the electric powertrain and other applications that are increasingly featured in hybrid Internal Combustion Engine (ICE) cars and Electric Vehicles (EVs) alike.

Silver Demand in the Automotive Industry, Silver Institute

Water Treatment & Space Exploration

Silver is a well know, and broad-spectrum biocide, proving to be effective in quashing a growing list of bacterial threats, including legionnaire’s disease, E. Coli, Streptococcus, and MSRA; these microbes account for a large proportion of germs that we encounter on a daily basis.

Although the WHO World Health Organisation has declared that — in its current applications — that Silver is “not an effective disinfectant for drinking water”, developments in the field nanotechnology and the use of Silver Nanoparticles may see this change in upcoming years. Recent studies have shown that silver loss from Ag (Silver) Nanoparticle sheets were lower than the standards for drinking water put forward by both WHO and the Environmental Protection Agency (EPA), with the conclusion that filtration through paper deposited with Ag Nanoparticles could be an effective emergency water treatment. In addition to this, recent studies have been done investigating the plausibility of using Silver as a biocide for spacecraft water systems. In fact, NASA is considering silver as the future biocide for exploration.

To summarise; if you, like Michael Burry believe that the future will bring a considerable shortage of accessible freshwater — and that this same future will see a drastic increase in space exploration and electric cars, you may just want to hedge your bets on this fascinating metal.