Here’s a summary of Mike Maharrey’s intriguing perspective on the future of the silver market, along with two of my own comments.

The global demand for silver, driven by industrial and military needs, is rapidly depleting global inventories, with the trend likely to accelerate. The silver market has experienced a supply deficit for three consecutive years, and 2023 saw a deficit of 184.3 million ounces. This shortfall is expected to increase to around 215 million ounces this year, marking the second-largest deficit ever recorded.

The rising industrial demand, particularly in the solar energy sector, is a significant contributor to these deficits. Industrial use of silver reached a record 654.4 million ounces in 2023, and this figure is expected to grow. Solar manufacturers alone may require over 20% of the current annual silver supply by 2027, and by 2050, solar panel production could consume 85-98% of global silver reserves.

Additionally, the tech sector’s demand for silver, due to its conductivity and reflectivity, is also increasing. Militaries worldwide are using more silver in advanced defense systems, further straining supply.

Despite growing demand, silver mine production is declining, and new discoveries are becoming rarer and more expensive. This situation may lead to a significant supply-demand imbalance, potentially driving up prices and creating investment opportunities.

Currently, silver is undervalued compared to gold, with a gold-silver ratio over 88:1, far above the historical average of 40:1 to 60:1. This indicates that silver might be undervalued and could be considered a strong investment opportunity given the current market dynamics.

Comment–The use of silver in solar panels is declining. According to a recent statement from Google, “Manufacturers have worked to minimize the amount of silver in solar panels, reducing silver usage per panel by approximately 80% over the past decades, while still maintaining quality and a lifespan of 25 to 30 years.” Additionally, I believe that the gold-to-silver ratio is less relevant today and is more likely to reach 1:100 before it returns to 1:50.