Silver to See Ongoing Deficits and Solar Panels up to 98% of all Supply by 2050

Whilst we await the final numbers from the Silver Institute for demand in 2022, all indicators point to a record year of demand for silver. On last forecast, they were projecting a figure of 1.21 billion oz, up 16% on 2021. Supply on the other hand continues the trend of coming off ‘peak silver’ in 2016, growing only 1%, another deficit year of more demand than supply.  But the big news is looking forward.

Around half of silver is used for industrial purposes and 2022 looks to see increasing industrial demand, up to around 540m oz.  These are all rapidly growing industries too of vehicle electrification, 5G technologies, and the global government lead push to green infrastructure, particularly solar panels.

Silver jewellery and silverware are also set to jump, each up 29% (235m oz) and 72% (73m oz) respectively.

That leaves the one dear to our hearts, investment. From the investment side of the equation, like gold, ETF’s saw outflows, but physical bars and coins surged with forecasts of 18% increase on 2021.

Mine production is only projected to increase by 1%, resulting in a near record, and second consecutive year, of global silver market deficit in 2022. At 194 million ounces, this will be a multi-decade high and four times the level seen in 2021.

But according to a recent study out of the University of New South Wales we aint seen nothin’ yet, and its all about solar panels.

First for context, the Silver Institute data saw silver for photovoltaics reach a record 113.7m oz in 2021. Their forecast for 2022 is up strongly again to around 127m oz, so around 10% of total demand.

The UNSW research paper (here) forecasts silver demand for solar panels alone will require over 20% of current supply (and supply is trending down) by 2027, double that currently. By 2050 photovoltaic demand will use 85-98% of current global silver reserves.

For all the talk of finding alternatives to silver for solar panels, the report effectively squashes that.  Indeed the above forecasts are based on the currently dominant p-type technology. The new technology needs even more:

“Emerging next-generation high-efficiency n-type TOPCon [tunnel oxide passivated contact] and SHJ [silicon heterojunction cell] solar cell technologies, with record efficiencies of 25.5% and 26.3% for two-sided contact devices, respectively, have a substantially higher requirement for silver.”

Indeed silver’s properties are so exceptional there are no alternatives that combine its title as the lowest electrical resistance of any metal with its longevity and reliability.

In terms of recovery, that too looks a long way off with the research stating:

“Over the longer term, the recycling of older solar modules could provide a significant source of silver. However, further investment and research is needed here, and it may still be several decades before the volume of PV waste processed each year is enough for more than a marginal contribution of new silver.”

The global, government lead push to renewable energy and government’s proven track record of having no regard to pesky issues like deficits and debt, means that this drive will be effectively recession proof and indeed the ideal fiscal stimulus, vote winning initiative to roll out in such times.

Finally, we remind you that there are EVs, electronics, 5G infrastructure, medical equipment and much more ON TOP of this, all fast growing, and all reliant on those same unique properties of silver.

More immediately, silver is forecast to post deficits of more than 100m oz over the next 5 years.  Growing demand against tight supply leaves only price as the variable in the classic economics 101 equation of supply/demand/price.

Wheaton Precious Metals is one of the worlds largest metals streaming companies.  Its president, Randy Smallwood recently said:

“We hit peak silver supply back about five, six years ago. Silver production on a worldwide basis has actually been dropping, and we’re not seeing as much silver produced from the mines,”

“When silver prices go up, it’s not like the silver mines can increase production, because the silver mines only supply about 25% of the silver,” Smallwood said, adding that the market often relies on the lead-zinc mines to satisfy the higher demand. He concludes:

“I’m very bullish on gold, but I’m even more bullish on silver,”