Silver Prices Explained

Silver prices are bullish across trading charts as the Fed slashed its rates by 50 basis points. Strong demand from photovoltaics propel its market growth, with India ramping up imports to 4,554 metric tons as the government reintroduced a requirement for major photovoltaics projects in the country to use domestically sourced panels. 

On the supply side, key mining sources announced decreasing output due to depleting sources and robust industrial demand. Prices rest on modest levels because consumers can tap stockpiles of secondary inventories at major futures exchanges and exchange-traded funds. However, experts warned that prices might hit more than $40 in 2025 due to strong geopolitical and economic issues. 

Why are silver prices fluctuating?

1. Supply and Demand

The rise of sustainable living prompted industries, companies, and minor consumers to purchase solar panels. This demand curve caused the highest global solar panel installation with a total capacity of 142 gigawatts. Therefore, the growing demand for solar panels directly impacts silver production and price since it’s one of the components of making solar panels.

2. Gold Price

Generally, when gold prices move, so do silver prices, however, there’s an ongoing debate regarding the relevance between gold and silver prices.  For instance, investors in the GSR (Gold-Silver Ratio) market trade silver according to gold’s current price.

3. Silver Bars

Digital money is the trend in purchasing and investing nowadays but some countries like Australia, Canada, Mexico, Austria, and the United States still use silver coins even in investment.  For instance, silver consumption for bullion coins had a whopping 325 million ounces of demand. As a result, demand for silver is expected to grow to 352 million ounces thus, playing an important role in the market.

4. Industrial Fabrication

Silver is the main element in industrial fabrication as it is the best electrical and thermal conductor of all metals. This year, industrial silver consumption is expected to reach 550 million ounces thus, tightening its production demand.

5. Automotive Industry

Almost 50% of a modern car’s electrical action constitutes silver and the emergence of these cars even makes the need greater. Overall, the Silver Institute expects 90 million silver ounces for the automotive sector alone. This is for infrastructure, decarbonization, and charging station expansion.

Which variables impact the price of silver?

• Supply and Demand
• Gold Price
  
• Silver Bars
• Industrial Fabrication
• Automotive Industry
• Geopolitical Factors

Where does silver come from?

Silver is a naturally occurring element in the Earth’s crust and is typically found in ore ( rocks or minerals that have a high concentration of this element ).

The Spanish colonization in the Americas in the 15th and 16th centuries drove the discovery, production, and trading of precious metals including silver. Ultimately, this propelled Spain the largest silver supplier in the mid-16th century.

Additionally, Spanish trade routes expanded in Asia with China as their main trading partner. Furthermore, the success of Spain’s trade became so widespread that the Americans accepted silver as a valid currency, culminating in the establishment of the London Silver Fixing, the first organized silver trading in 1897.

Today, 23% of global silver production comes from Mexico, making it the largest producer in the world and followed distantly by China, Peru, Chile, and Russia.

What is the future price of silver?

Considered ”Gold’s Brother”, silver prices move along with the gold value in the market. The commodity’s market presence is further shaped by the numerous investments and industry demands. This includes crypto and global electrification (electricity and cars).

Electric cars use 1 to 2 ounces of silver for every vehicle production. Additionally, its consumption averages around 500 million ounces in the solar power industry, particularly in the photovoltaics sector. Thus, these huge applications influence the fluctuating silver prices.

Overall, these and other emerging and current factors such as economic volatility, investors’ appetite, and industrial demand are the basis of promising silver prices in the future as experts forecasted a bullish $81 market price in 2030.

However, this price prediction is a rough calculation from the current global economic stand and emerging factors will likely change its value course.