Solar energy is the next big thing!!
Well, you heard that right. From airports in India that are being powered constantly with solar panels, houses that thrive through solar energy to even cars being created that’ll be powered by solar panels, the demand for it is growing at a rapid pace.
Solar energy demands are being seen to be playing a significant role in silver’s future as well, both in the short and also long term. But the question is how much silver does the market need?
Silver, often referred to as the “poor man’s gold,” has recently found itself at the centre of a perfect solar storm. With an increasing global focus on renewable energy and the push towards solar power, the demand for silver in the photovoltaic industry is expected to skyrocket. Experts believe that the actual demand for silver could far exceed current projections.
So without further delay let’s dive into it.
The Solar Power Revolution:
The world is witnessing a rapid shift towards renewable energy, and solar power is at the forefront of this revolution. Solar panels, which rely heavily on silver, are becoming increasingly popular as governments and organizations strive to reduce carbon emissions. As solar power installations continue to rise globally, the demand for silver in the photovoltaic industry is set to soar.
According to reports silver’s inelastic supply might be overwhelmed by skyrocketing demand from solar panel manufacturers as early as this year.
According to Silver Stock Investor Peter Krauth, there are 2 major factors as to why the silver demand scenario has changed in the world. First, the current projection tends to underestimate the volume and pace of new solar installations.
Another reason is that there are tax credits and benefits for adapting to solar as well and in many cases, it serves as additional electricity output as well.
Growing Investment Demand:
Silver’s role as a hedge against inflation and a safe haven asset has also been driving investment demand. As economic uncertainty persists and investors seek refuge in tangible assets, silver has gained traction as an attractive investment option. The combination of industrial demand and investment demand could lead to a substantial supply-demand imbalance in the silver market.
The investment demand for silver is growing and there are several factors supporting that.
China is a dominant player in the worldwide market concerning solar panel products and represents almost 80 per cent of global production capacity. It’s consuming more solar panels domestically, with installations growing at a rapid pace.
The reason why silver is a great investment opportunity can be related to Bloomberg’s post. “Bloomberg believes that in 2023, China is on the verge of installing three times as much solar power as they did in 2021. Bloomberg believes that the silver demand is going to be closer to 180 to 200 million by the end of 2023.”
Technological Advancements:
Advancements in technology are further bolstering silver’s demand. Silver’s unique properties, including its exceptional conductivity and reflectivity, make it indispensable in various high-tech applications such as electronics, medical devices, and automotive components. As technological innovations continue to unfold, the demand for silver in these sectors is expected to rise substantially.
Talking about the second factor will skyrocket the silver demand concerning the components that are used in solar panels. The predominant solar panel technology used today is known as “passivated emitter and read contact(PERC) cell, but this design is on the verge of being replaced by 2 new efficient technologies known as tunnel oxide passivated contact(TOPCon) and heterojunction structures(HJT). 10 milligrams of silver per Watt is used in PERC cells, 13 milligrams are used in TOPCon cells and almost 22 milligrams per watt is used in HJT. hence, the use of silver in technology is going to rise drastically.
Supply Constraints:
Unlike gold, where above-ground stocks are plentiful, silver’s above-ground supply is limited. Additionally, mining output has been relatively stagnant in recent years. These supply constraints, coupled with increasing demand, have the potential to exert significant upward pressure on silver prices.
As per the 2022 edition of the Silver Institute’s World Silver Survey, the solar energy industry has been increasingly consuming silver in recent years and this uncanny interest in silver is on the verge of growing exponentially.
The silver demand for solar energy is not something that has risen recently but has been in the works for several years. According to a 2020 Silver Institute analysis of silver’s use in solar energy, 11% of the world’s silver supply, or over 100 million ounces, was used for solar energy demand in 2019. By the year 2020, silver ended up being a consumer at a rate of 12.7 per cent at 101 million ounces as both supplies decreased and demand increased.
The market participant has questioned how much silver demand from the solar sector may increase as a persistent desire to confirm green energy is on the rise. There is also the question of whether increasing usage may affect other high-demand sectors, such as the automobile industry, jewellery fabrications or physical investment in the form of bars or coins.
The World Bank projections have predicted that the use of silver in the energy technology segment could reach about 50 per cent of 2019’s total silver demand by 2050, which means consumption of 500 million ounces for solar alone.
Technical – Silver is quite ready to give a big swing in the month of July 2023
Since 1 May 2023 Silver prices had a negative trade and it gave up more than 5.50%. Prices retreated from the peak of 78292 and dropped towards 67515 which was June 2023 low.
From the last two weeks, prices have stalled their recent bearish momentum and recovered more than 4.50%, from the bottom of June 2023. Prices are now trading at 71257 levels.
On the above chart, Silver prices trading under Bullish three-drive patterns. Prices already completed its two drives 1 and 2. Now prices appear to test its next drive which would be 127.2% Fibonacci Retracement of its previous drive. The upside target is projected around 81000 and plus according to the above chart pattern.
For this month, a break above 74580 on a closing basis will confirm a nearly 8%-9% jump and Silver prices may make their all-time high again. Else, any temporary correction towards 69500-69000 will attract buying activities unless it gives closing below 67450.00 on a monthly basis.
Alternatively, on the downside, crucial support is seen at 67450 and a break below only will change the direction and prices may set new pressure. Downside level expected at 65000-63500.
Traders may stay long unless prices give closing below 67450.00 in the month of July.
Conclusion:
The perfect solar storm for silver is brewing, driven by the increasing demand from the solar power industry, investment demand, supply constraints, and technological advancements. As real demand for silver could surpass current projections, investors and market participants need to closely monitor this emerging trend. The potential implications for silver prices and the silver market as a whole make it an intriguing opportunity for those looking to diversify their investment portfolios. However, as with any investment, it is crucial to conduct thorough research and seek professional advice to make informed decisions in this evolving landscape.