April 28, 2023
- Investing News: Interest in solar energy increases demand for silver
- Morgan Stanley: Gold or silver? Here are four key differences
- Daily FX: Is it silver's time to shine brighter?
Interest in solar energy is increasing the demand for silver
Investing News, Bryan McGovern, April 3, 2023
The global shift to green energy has increased the need to find alternatives to traditional fuels like oil and gas. This also applies to silver, as it is used in solar panels, which are becoming increasingly important in energy production. The white metal plays a crucial role in solar photovoltaic technology. Solar power is the primary source of green electricity, according to the World Silver Survey.
A report published by the Silver Institute in 2020 on the role of silver in solar energy shows that in 2019, 11 percent of the total silver supply, or about 100 million ounces, went to solar energy demand. By 2020, solar photovoltaic consumed 12.7 percent of the year's silver supply, or 101 million ounces, as both supply decreased and demand increased.
As demand from the solar energy sector puts pressure on silver supply, the white metal is being conserved in solar cells or alternatives to silver are being sought in solar photovoltaic modules. Conservation has some impact on silver supply, but it is only a small part of the overall picture. At the same time, copper and aluminum are considered alternatives to silver in the solar energy markets, but they have profitability-related shortcomings.
Gold or silver in your investment portfolio? Here are four important differences
Morgan Stanley, Mark Robert Yosten
The following four factors should be considered when contemplating an investment in gold or silver:
- Silver may be more tied to the global economy: Half of all silver is used in heavy industry and high technology. For this reason, silver is more sensitive to economic changes than gold. When economies start to rise, the demand for silver generally increases.
- Silver is more volatile than gold: The price volatility of silver can be two to three times that of gold. This can pose a challenging portfolio risk.
- Gold has been a more effective diversifier than silver: Silver can be considered a good portfolio diversifier, but gold is even more effective. Economic downturns affect gold less because its industrial uses are quite limited.
- Silver is currently cheaper than gold: Per ounce, silver is generally cheaper than gold, making it more accessible to small investors.
Both gold and silver can be purchased in various investment forms:
- Physical metals: Unlike stocks and bonds, gold and silver can be bought as physical assets. The metals would be stored in a third-party storage facility, or investors can also store them themselves.
- Holding bars and coins can have downsides. Investors often pay a premium over the spot price of the metal due to manufacturing and distribution costs. Storage and insurance costs must also be considered.
- Exchange-traded funds: ETFs have become a popular way to invest in gold and silver without the obligation to store physical assets. However, investing in an ETF does not give investors access to the actual metals. Some precious metal ETFs are also taxed as collectibles, and they do not qualify for the lower long-term capital gains tax.
- Mining stocks and funds: Some investors see an opportunity to own shares of companies that mine gold and silver or investment funds that have portfolios of these mining operators.
Is it silver's time to shine brighter?
Daily FX, Nick Cawley, 4/10/2023
Silver continues to benefit from the current economic situation as ongoing global inflation concerns and recession fears mount. These concerns are unlikely to dissipate in the upcoming quarter, so the price of silver may continue to rise.
The daily chart shows a positive development for silver since mid-March, and it has a strong rally-inducing trend. Silver is currently even overbought, so a stabilization period may be necessary before the next rise.
The silver/gold ratio also indicates silver's underperformance compared to gold since mid-December 2022, and only the recent rise has broken the pair out of a downward trend in the last few days.
Although the current upward rise may be exaggerated, both setups look positive. If the trend continues, silver will not only rise but also surpass gold. In the next three months, silver may shine even brighter than gold.
