Silver (Silver) in the technological era: from precious metal to heart of machinery

Currently, silver ore is experiencing an unprecedented period. It is not due to a temporary investment trend but because of a fundamental shift in demand dynamics. Silver, once considered the “poor man’s gold,” has regained profound significance in building the future of technology.

Origins: When Money is a Commodity

Before the advent of paper trading or digital payments, silver served as a medium of exchange for over 4,000 years. From traditional coinage to empires, historical evidence indicates that:

• In the 16th century, Spain minted silver coins, creating the first globally accepted currency
• The Silver Standard (Silver Standard) remained influential until 1935
• Although its financial role diminished, silver re-entered a new chapter in industrial applications

Why is (Silver) Important in Today’s World

The physical properties of silver ore make it irreplaceable by any other material:

Best conductor of electricity and heat — essential for smartphones, computers, and all electronic devices

Maximum reflectivity — used in solar panels to enhance sunlight energy conversion efficiency

Antimicrobial properties — applied in medicine, from bandages and surgical tools to water filtration systems

Flexibility and ease of processing — necessary for microchips and compact 5G technology

These components, whether in electric vehicles, clean energy, advanced communication systems, or AI development, all depend on silver. This is why demand continues to grow inevitably.

Market Conditions: When Demand Surges and Supply Slows

The World Silver Survey 2025 by The Silver Institute reveals a critical picture: the silver ore market is facing a “structural deficit” for the fourth consecutive year.

Demand drivers:

• The industrial sector requires 680.5 million ounces in 2024, the highest ever (59% of total demand)
• The clean energy and electric vehicle trends continue unabated

Supply issues:

• Production slowdown due to market volatility
• Silver is a byproduct of other mining activities (lead, zinc, copper)
• Global inventories are decreasing

This “Perfect Storm” is expected to push prices to unprecedented levels.

Revisiting Macro Factors

Beyond the commodity itself, three macro factors influence the Silver market:

Interest rate policies — Lower interest rates in 2025 lead investors to seek value-preserving assets like silver

Dollar value — When the dollar weakens, silver becomes cheaper for international trade, boosting demand

Economic and geopolitical uncertainty — Investors flock to safe-haven assets amid fears

Comparison: Gold vs. Silver

The Gold/Silver Ratio (GSR) indicates how many ounces of silver are needed to buy one ounce of gold.

Typically, this ratio fluctuates with market psychology:

• During the COVID crisis (March 2020), it soared to 124:1 as investors flocked to safer gold
• In 2011, it dropped to 31:1 amid high market confidence

Currently, the ratio is at 84:1, suggesting the market has not fully priced silver based on fundamental factors. This gap may present opportunities.

Main differences:

• Market size: Gold’s market is about $3 trillion, compared to $2.7 trillion for silver. The smaller market means the same amount of money can impact prices more
• Volatility: Silver is 2-3 times more volatile than gold, offering higher gains in bull markets but larger losses in bear markets
• Role: Gold is a true safe-haven asset, while silver is a hybrid of precious metal and industrial commodity

4 Ways to Access the Silver Market

1. Physical Silver Investment

Buying silver bars or coins provides the highest “ownership” stake.

Advantages: Hold tangible assets, no counterparty risk

Disadvantages: High capital requirement, bid-ask spreads from global market prices, storage and insurance costs, low liquidity

Target: Suitable for long-term investors seeking stable holdings

2. Investing via Funds and Mining Stocks

Invest in mutual funds focusing on silver producers or primary stocks like Pan American Silver, Wheaton Precious Metals, Fresnillo.

Advantages: High liquidity, traded on official stock exchanges, no storage worries

Disadvantages: Company-specific risks, management issues, production costs, geopolitical risks in mining countries, stock prices may not always track market prices

Target: Investors seeking liquidity and diversification

3. Futures Contracts

Trade futures contracts through TFEX, referencing 99.9% pure silver prices.

Advantages: Low initial capital due to leverage, profit in both bull and bear markets

Disadvantages: Very high risk, complex, requires experience

Target: Professional investors with high risk tolerance

4. CFD Trading (Contract for Difference

Enter into contracts with brokers to profit from price differences without owning the actual asset.

Advantages:

• Low capital requirement )High leverage(
• Flexible, can open long or short positions
• High liquidity, tradable nearly 24/5
• No storage costs )No storage fees(
• No commission, low spreads

Disadvantages:

• Leverage risk
• Need to choose reputable brokers

Target: Short- to medium-term speculators seeking flexibility

Opportunities and Risks

Opportunities:

1. Higher potential returns — higher volatility and lower valuation compared to gold
2. Continued industrial demand — clean energy, AI, 5G will sustain demand
3. Easy access — priced many times lower than gold, suitable for retail investors
4. Inflation hedge — proven store of value over a century

Risks:

1. Severe volatility — potential for significant short-term losses
2. Sensitive to economic cycles — recession could sharply reduce industrial demand
3. Hidden costs )for physical holdings( — storage, insurance, theft risks
4. No dividend income — profits only from price differences

Summary

Silver ore has stepped out of its traditional role and become a vital asset for the young global economy. Surging demand, unavoidable deficits, and undervaluation relative to gold create an intriguing investment landscape.

Investors seeking opportunities should choose channels aligned with their approach and risk appetite—whether physical holdings, stocks and funds, futures, or CFD trading—all have their place but require understanding and clear planning.