No longer "the poor man's gold," silver is now needed by the times.
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In the past, silver was called "the poor man's gold" not because it was truly cheap, but because the market never took its scarcity seriously.
Ample supply, adjustable inventory, dispersed uses—for a long time, the market believed that no matter how demand fluctuated, silver could always be quickly restocked. Because of this, it was traded repeatedly as a shadow of gold but was rarely taken seriously for allocation.
But this premise has already been broken by reality.
Since 2021, the global silver market has experienced a physical supply-demand gap for consecutive years. Unlike previous short-term crunches amplified by financial cycles, this time the gap comes directly from the industrial side: demand for silver from key fields like photovoltaics, electrification, and high-end electronics is expanding rapidly in sync, while supply can hardly speed up.
What's even more fatal is that silver's supply system is highly insensitive to price signals.
Over 70% of global silver output comes as a byproduct of other metals, with production pace determined by the investment cycles of copper, lead, and zinc—not silver prices themselves. This means that even if prices rise, supply is unlikely to increase rapidly; as inventory buffers are continually depleted, the market faces not short-term fluctuations but persistent constraints.
It is at this moment that silver begins to break free from the "poor man's gold" narrative. It is no longer merely a cheap substitute when gold rises, but is becoming a material that is continually consumed by key industries and is difficult to replace.
Silver's "Identity Dilemma": Sandwiched Between Gold and Industrial Metals
To understand why silver has long been undervalued, one must first understand its "identity dilemma."
In the modern commodity system, assets can roughly be divided into two types:
One is credit-type assets, of which gold is a typical example. Gold's value anchor does not come from industrial use but from the credit system and reserve demand. Even in the weakest demand years, net gold purchases by global central banks can account for 15%–25% of total annual demand, providing a stable price base.
The other type is growth-type assets, such as copper, crude oil, and iron ore. These metals hardly have any financial attributes, with prices mainly driven by economic cycles, infrastructure, and manufacturing investment.
Silver happens to be stuck between these two.
According to the "World Silver Survey 2025," global silver demand in 2024 is 1.164 billion ounces (about 36,200 tonnes), including:
Industrial demand: 681 million ounces, about 58%;Jewelry and silverware demand: 263 million ounces, about 23%;Investment demand (bars, coins, ETFs): about 191 million ounces, about 16%.
The problem is that these three types of demand behave in completely different ways:
Industrial demand depends on industrial cycles, jewelry is highly price sensitive, while investment demand is easily influenced by macro sentiment.
This structural split means silver long lacks a stable, singular, dominant pricing anchor.
The result in price terms: silver has long been forced to rely on gold for pricing.
A direct indicator is the gold-silver ratio. Over the past half-century, the historical center has been around 55–60; but from 2018–2020, it once broke through 90, even approaching 120 at the peak of the pandemic.
Even with a record-high industrial demand for silver in 2024, the gold-silver ratio remains in the 80–90 range, significantly higher than the long-term average.
It's not that silver is "useless," but rather the market still prices silver with gold's financial logic.
Silver's Redefinition: From "Dispersed Usage" to "Industry-Locked"
The real change did not start in financial markets, but quietly from the industrial side.
In short: Silver is transitioning from an industrial metal with dispersed usage, to a functional material locked by key industries.
1. Photovoltaics: Silver becomes "indispensable" for the first time
Photovoltaics is the most critical factor in the change in silver demand structure.
In 2015, global new photovoltaic installations were about 50GW; by 2024, this number exceeds 400GW—an 8-fold increase in less than ten years.
The industry has indeed been "de-silverizing." Silver content per watt has dropped from about 0.3 grams in the early days to about 0.1 grams with current mainstream technology.
But the expansion speed of installed capacity far outpaces the decline in per-unit usage.
According to the "World Silver Survey 2025," actual silver demand from the photovoltaic industry in 2024 reached 198 million ounces, an increase of over 1.6 times compared to 2019, accounting for about 17% of global silver demand.
More importantly, silver's role in photovoltaics isn't "freely replaceable." For conductivity, long-term stability, and reliability, silver is still the most optimal choice overall. Technological progress changes the way it's used, not its status.
This gives silver, for the first time, a large-scale, fast-growing, and price-insensitive source of demand.
2. Electric Vehicles and AI Infrastructure: Not a massive quantity, but extremely hard to substitute
If photovoltaics brings certainty in demand scale, electric vehicles and digital infrastructure bring a change in the nature of demand.
A conventional fuel vehicle uses about 15–20 grams of silver on average; a new energy vehicle usually uses 30–40 grams.
With global auto sales growing only slightly, new energy vehicle penetration has jumped from less than 3% in 2019 to nearly 20% in 2024, structurally boosting silver demand.
Meanwhile, demand from data centers, AI servers, and high-end electronics for silver is more about irreplaceability than absolute volume.
In 2024, silver demand from electrical and electronics-related sectors reached 461 million ounces, hitting new records for consecutive years.
These applications are relatively insensitive to price, but extremely sensitive to supply stability.
The Reality on the Supply Side: Silver Isn't a Metal That Can Boost Production Just Because of Higher Prices
In stark contrast to the certainty on the demand side is the rigidity of supply.
In 2024, global mined silver output was about 820 million ounces, with year-on-year growth of less than 1%.
More importantly, over 70% of global silver output comes from byproducts, mainly piggybacking on lead, zinc, copper, and gold mines. This structure has seen little substantive change in the past two decades.
Primary silver mine output is only about 228 million ounces, less than 30%, and continues on a long-term downward trend.
This means silver production isn't determined by silver prices but dominated by the investment cycles of base metals.
From Cyclical Shortages to Structural Tightness
Looking back, silver has indeed experienced bull markets, but most were derivatives of financial cycles.
What's different now is that since 2021, the silver market has posted a physical supply-demand deficit for several consecutive years.
According to "World Silver Survey 2025," the annual global silver supply-demand gap from 2021–2024 averaged 150–200 million ounces, with a cumulative gap nearing 800 million ounces.
Visible silver inventories are themselves not ample. Current global circulated inventory covers only about 1–1.5 months of consumption, well below the 3-month safety line commonly recognized for commodities.
Once large quantities of silver enter photovoltaic components, electrical equipment, and infrastructure, it's difficult to send them back to the circulation market.
Silver Is No Longer Just Gold’s Shadow
Silver has not suddenly become scarce. It has, for the first time, met three simultaneous conditions:
Demand scale is real and sustainableKey uses are hard to replaceHighly constrained supply growth
In the past, these three conditions never appeared all at once.
While the market still understands silver as the "poor man's gold," the industrial chain has begun to reevaluate it by the standards of a key functional material.
Silver may still fluctuate, but it is certain—it is no longer just gold's shadow.
And this is the most important, and most easily underestimated, underlying change of the current cycle.
Reference:
"Characteristics of Current Silver Supply and Demand and Historical Price Review," Founder Securities
"World Silver Survey 2025," World Silver Institute
Risk Warning and DisclaimerThe market involves risks, and investment requires caution. This article does not constitute personal investment advice and has not considered the individual user’s unique investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their specific circumstances. Invest at your own risk.
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