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Silver’s Timeless Appeal: Why Analysts Think it Will Shine Bright in the Long Run

By Preserve Gold Research

Silver has a long and illustrious history as a form of currency with a unique appeal that few other assets can match. Not only has the metal been used for thousands of years to make coins and jewelry, but it remains one of the most sought-after metals on the market today.

Today, silver’s enduring appeal cuts across a range of sectors and industries, from industrial applications to jewelry making and more. With the proliferation of technology and the advent of modern-day investing, silver’s timeless appeal has only grown in recent years as its use has diversified and its prices have risen.

Given silver’s compelling fundamentals and its resilient performance in recent years, many analysts are optimistic about the metal’s prospects for the long term. They point to silver’s continued use in industrial applications and its strong investment demand as two key drivers of its long-term growth potential. While silver may experience short-term volatility like other assets, experts say its expanding demand and diminishing supply should serve as a powerful tailwind for silver in the long run.



Historical Significance of Silver

Throughout history, silver has held its position as a highly valued metal with a broad range of applications. Ranked second only to gold in terms of malleability and ductility, silver has been a preferred choice for artisans and craftsmen around the world for hundreds of years. It was frequently used to make coins and jewelry, as well as to facilitate trade and commerce in markets and bazaars owing to its convenience and portability.

Along with gold, silver is one of the oldest forms of currency in the world, having served as a medium of exchange for thousands of years. Recent archeological evidence suggests that before silver was minted into coins in 600 BC in Lydia, it was used to pay for goods and services in the form of barter dating as far back as 3500 BC. Given its inherent value, silver has been an integral part of the global economy, opening up new possibilities for trade and commerce and serving as an important source of wealth.

With its long and storied history, silver has earned its status as a timeless asset that has been closely linked to the evolution of modern markets and economies. It is this unique combination of historical significance and modern-day appeal that has made silver a popular choice among both investors and industrial users.



Silver’s Growing Industrial Uses to Support Long-Term Growth

Today, the legacy of silver lives on in modern-day markets, where it continues to be a highly demanded-asset. Its diverse range of industrial applications has only grown in recent years with the proliferation of technology and the growth of new markets, creating a powerful demand-supply dynamic for silver that is expected to drive its long-term prospects.

A look into the fundamentals of silver reveals that its investment demand and industrial applications are two primary drivers of its success – with the former expected to remain strong in the long run and the latter poised to benefit from technology-driven growth according to analysts.

With industrial settings accounting for roughly 60% of world silver demand, the metal is expected to benefit from increased usage in electronics, automotive, healthcare, and other budding industries. From powering electrical switches to enhancing the efficiency of solar panels, silver’s industrial uses are expected to grow in line with the global economy, providing it with a powerful growth tailwind over the long term.



Silver in the Technology and Consumer Electronics Sector

Silver is found in nearly every modern electronic device ranging from smartphones and tablets to computers and televisions. The metal is a key component in the electrical circuitry of these devices, playing a critical role in the conductivity required to power our digital lives. Its high electrical and thermal conductivity, as well as its malleability and lack of corrosion, make it a natural choice for modern electronics with few substitutes.

As our digital lives become increasingly intertwined with the physical world, silver is expected to play an even more prominent role in technology and electronics. From powering the 5G revolution to playing a key role in smart cities, many experts believe silver will be at the forefront of the next wave of technological advancement. With consumer demand for electronics expected to remain strong, silver is well-positioned to capture the upside from this trend in the long run, according to analysts.



Powering the Future – Silver’s Role in Renewable Energy

Renewable energy has garnered a great deal of attention in recent years as the world moves towards a low-carbon economy. As more and more companies pledge net-zero emissions, the demand for renewable energy technologies is expected to soar, according to experts.

Silver plays a key role in many of these clean energy solutions, powering solar cells and electrical components used to produce renewable power from wind, water, and other sources. With its impressive electrical conductivity combined with its durability and corrosion resistance, silver makes for a compelling choice in the energy market and is expected to be a key driver of growth in renewable energy markets over the long term.

Research from Market Research Future points to a 10.10% compound annual growth rate for the renewable energy market through 2030, with silver-based solutions playing an increasingly important role. Sales of electric vehicles doubled in 2021, and with the expected growth in solar energy capacity over the next decade, analysts believe silver is well-positioned to benefit from the secular shift towards clean energy solutions in the years ahead.

As the global transition to renewable energy continues to gain momentum amid growing government incentives and consumer demand, experts believe silver will emerge as a major beneficiary of this trend in the long run.



Silver’s Expanding Use in the Automotive Industry

With the integration of advanced technology, today’s motor vehicles are more sophisticated than ever before. From the engines to the electrical components, modern cars and trucks are packed with an array of electronics and systems – many of which rely on silver for their efficient operation.

Every electrical component in a car is activated by a small voltage that must be delivered through a network of electric circuits. For these circuits to function properly, the components require a material with high electrical conductivity and corrosion resistance – silver. From providing efficient heat transfer to powering airbags and automated driving systems, silver can be found in nearly every corner of the automotive industry.

Looking ahead, the demand for silver in the automotive market is projected to continue gaining momentum as electrification and automated driving technologies become more commonplace.

According to analysts, the shift towards electrification is expected to drive increased demand for silver in the automotive sector, with projections pointing to almost 90 million ounces of silver being used in cars by 2025.



An Undervalued Asset with Favorable Supply-Demand Dynamics

With strong and diverse demand from both investors and industrial users, silver’s fundamentals remain strong, according to experts – with a favorable supply-demand dynamic and robust long-term growth prospects. Although the metal has been undervalued relative to gold in recent years, many analysts believe silver is poised to benefit from a “new era of structural deficits” as The Silver Institute points out.

The latest industry data provides a clearer picture of the current state of the silver market. Figures released by The Silver Institute reveal a 38% increase in global silver demand since 2020, as the global economy continues to rebound from the effects of COVID-19. In 2022, the demand for silver soared by an impressive 18%, reaching a record high of 1.24 billion ounces amid a surge in investment and industrial demand. 

At the same time, the supply side of silver’s equation has remained constrained in the face of production cutbacks and mine closures. According to The Silver Institute’s 2023 Word Silver Survey, the global silver market experienced its second year of supply deficits in 2022, erasing the cumulative surpluses of the past 10 years. The Institute’s findings revealed a staggering undersupply of 237.7 million ounces in the silver market last year with researchers noting that it “may well have been the largest deficit on record.”

Looking ahead, analysts expect similar deficits, with silver’s supply-demand dynamic remaining favorable in light of the metal’s growing list of uses. With record industrial demand and a structural undersupply, experts believe silver offers a compelling opportunity for savers looking to capitalize on the metal’s long-term upside potential. As the digital era continues to unfold, silver’s long-term prospects look primed to benefit from the world’s increasingly tech-driven economy.

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