Silver
Crossovers in the metal’s double life
Silver’s story has always been entangled with other metals, since 80% of silver comes from the secondary market, extracted as a by-product of copper, gold, zinc and other ores. Only 20% of silver occurs in native form. Though it belongs to both precious metals family (alongside gold) and industrial metals (alongside copper and others), the grey metal has found itself in a grey area, underappreciated in its role as a store of value and not fully recognized as a critical mineral. The conflict comes from the fact that precious metals and base metals are typically driven by opposing forces: one group reacts well to economic pessimism, while the other does best during economic growth. In silver’s double life, its value has often been cancelled out in these algorithms.
However, an unusual crossover of sorts, with the fundamentals for both monetary and industrial uses strongly aligned on the upside, places silver in a rare position from which it can finally benefit from its dual identity. Over the past year, silver prices have been holding up firmly at over US$30/oz, with potential for further gains.
Silver as a monetary metal
In its role as a monetary metal, silver has always come second to gold, the ultimate safe haven asset. By comparison, silver became called “poor man’s gold.” The inelegant description does bear some truth, as the profile of the silver investor is different from that of a gold-buyer: “Typically, a Republican investor with a couple million dollars in wealth will buy gold, whereas someone with a wealth of US$200,000 will buy silver. Besides the demographic differences, silver companies also have a higher retail component on their register, typically at 60-70%, whereas gold stocks are 70-80% institutions and 20% retail,” explained Dan Dickson, the CEO of Endeavour Silver, a silver producer out of Mexico.
Nevertheless, silver has more than done its job as a store of value, outperforming gold in times of uncertainty. Analysis from Capitalight Research has found that the average increases in the silver price outpaced those in gold during key historical points of tumult. For instance, between 2008 and 2012, silver rose by 495% against the trendline, whereas gold rose 238%. Today, gold has made record gains, but silver remains far from its record at US$50/oz. The gold-silver ratio, which measures how much silver can be bought with one ounce of gold, has widened significantly, reaching levels above 85:1, far higher than the historical average of 70:1 that has characterized the gold-silver relationship since the 1980s. This means silver is undervalued and could still rise significantly to reclaim the historical parity with gold.
“Silver used to be viewed primarily as a monetary metal only, but in the last few years, it has strongly emerged as a key industrial metal. It is this part of demand that I believe to be most relevant for silver today.”
Greg McKenzie, President and CEO, Silver Storm Mining
Silver as an industrial metal
Warren Buffett famously called gold “lifeless” and a “metal that will never produce anything.” Well, by contrast, silver has what we’ve been referring to in this article as a “double life”, and it has over 10,000 applications. Silver was once even believed to have healing properties, which was not pure folklore since silver does have antibacterial properties, making it valuable in medical devices.
Silver’s many applications in critical domains like defence and energy have prompted calls for its recognition as a critical mineral on the official lists in North America. Mitchell Krebs, the CEO of Coeur Mining, shared his thoughts on the importance of such labels: “Silver is the unsung hero of the global economy with more end uses than any other metal. Depending on how you define ‘critical,’ it’s hard to see how a metal so integral to both energy and national security isn’t considered critical. Beyond solar panels, silver is vital for energy storage, batteries, charging infrastructure, data centers, robotics, and AI. As the most conductive metal, silver is embedded in everything from drones and missiles to submarines, GPS, and radar. I’d argue all metals are critical. They often coexist geologically, so trying to separate ‘critical’ from ‘non-critical’ makes little practical sense.”
Critical or not, demand for silver has been growing fast, primarily driven by the solar energy sector, which represents about 20% of industrial demand. According to Sprott, the solar energy industry is on a rampant growth path, with a 158% increase in silver demand for solar panels between 2019 and 2023.
Traditionally, silver was primarily viewed as a monetary metal alongside gold, but in recent years, its role as an industrial metal has gained more relevance. In the relationship with gold, silver has often been seen as “secondary” or “lesser than.” Interestingly, the higher value ascribed to gold is not purely arbitrary but influenced by the superiority of its material attributes: gold does not oxidize, and that forever lustre has become a symbol of permanence and a forever store of value. By contrast, silver is highly resistant to corrosion, but not immune. If as a soft asset and decorative metal, gold wins by a landslide, as a hard asset of utilitarian value, silver bests gold.
“Majors are always looking for projects with over 100 million oz of silver at grades above 300 g/t—but there are very few such projects. Silver has been significantly underexplored and our goal is to help fill that gap by delivering both grade and scale.”
Jorge Ramiro Monroy, Founder and CEO, Reyna Silver
Fundamental arithmetics
2025 marks the fifth year of continuous silver deficits, with demand at record heights and supply mostly unchanged in the last 10 years. Despite these undeniable fundamentals, silver prices are yet to explode in the same way gold has. This is explained by the lag between the real/physical silver available and the “paper market:” “In the paper market (financial instruments like ETFs, futures contracts, and other derivates), there is a lack of strict requirements that silver derivatives are fully-backed by physical metal, so the holder or issuer does not need to actually possess physical silver. Therefore, a lot more silver is traded on paper than physically exists, the system relying on the assumption that not everyone will demand delivery at once. If, for some reason, traders were suddenly required to deliver the silver instead of settling it in cash, the supply of silver would fall dramatically. Prices could be expected to reach up to US$200/oz. Expanding premiums, with a growing gap between the spot price and the price paid to buy physical silver, are pointing to the imbalance in the market,” explained Greg McKenzie, president and CEO of Silver Storm Mining, a Mexican junior which owns the La Parilla historic mine.
Some analysts project silver could climb to US$40/oz this year, while some bulls believe US$100/oz is attainable. A few even place silver at US$300/oz by 2030. However, industrial demand alone is unlikely to drive prices toward the higher end of these estimates. It would take a major catalyst, impacting the monetary side of silver, to push silver sentiment to extreme highs.
As a small market, valued at around US$30 billion globally, silver is highly volatile, which means small changes in the supply-demand balance trigger more dramatic fluctuations. This is why silver is sometimes referred to by traders as “gold on steroids” or “the high beta version of gold.” The last silver rally, when silver reached a record of US$50/oz, took place in the aftermath of the financial crisis. During those years, the monetary side of silver accounted for the majority of demand, at 550 million oz out of 800 million oz. Today, 55% of silver demand comes from industrial applications, leaving a smaller and therefore more volatile and reactionary monetary market.
Article header image courtesy of Endeavour Silver