Silver Investing in the 21st Century
Monday, 2/10/2025 12:46
No.3 asset beats platinum + palladium on solar...
CENTRAL BANKS, investment access, fear,
says Adrian Ash at BullionVault.
If you've read our 2 previous notes on the 21st Century so far, you'll know those
3 factors made gold the No.1 investment since New Year's Eve 1999. Plus
China and India, of course.
So what about silver or the twin precious metals of platinum and palladium?
By the start of 2025, silver had risen 493% since New Year's Eve 1999.
That compares with gold's 819% in Dollar terms...
...and it wins silver a top 3 finish across the first quarter of this century, just behind the US stock market.
But while gold set its latest all-time Dollar highs last autumn, with ex-Dollar prices hitting new records already in 2025, silver peaked back in 2011 at $50 per ounce.
Some analysts now see a record year ahead for the 'devil's metal'. But it's still 40% below that all-time high right now.
What's more, demand from central banks...
...a key turnaround in gold's fortunes since Millennium Eve...
...can't explain silver's strong 21st Century to date, as Matt Turner of Anglo American noted at
the LBMA seminar on this topic I chaired in December. Because no central bank buys silver as a reserve asset today.
Maybe that explains the performance gap between gold and
silver prices?
Or maybe central banks did help silver, as Matt suggested, because their gold demand helped drive up silver prices by association.
Either way,
the Gold/Silver Ratio has risen, suggesting that investors and consumers since the start of 2000 have sought safety of the yellow metal, driving its premium higher.
Reaching 86 as 2024 drew to a close, the price of gold in terms of silver ended the 20th Century at 54, having already risen from its start-1900s level of 35.
The underlying direction has been higher as well, with the Gold/Silver Ratio averaging 68 over the past 25 years after reading 57 on average between 1975 and 1999.
But if silver's investment and monetary appeal has looked dull if not tarnished next to gold, its strong and ever-growing tech stories are increasingly important, said Suki Cooper of Standard Chartered at
Christmas 2024's LBMA seminar.
From
PV to EVs, defense to AI, silver's industrial demand hit yet another record in 2024, and it looks strong for the next 25 years, too.
Contrast that with 25 years ago. Back then, photography was the single biggest use of silver. And that industry's silver demand set an all-time record in 1999.
But from there, photographic demand halved by 2007...it was then overtaken by solar-energy in 2011...and it's now down 90% by weight, tumbling to a barely noticed also-ran among silver's big technological uses.
Which brings us to the platinum group metals, and the "death" of the internal combustion engine.
Both platinum and palladium continue to find their largest single use in autocats for reducing harmful emissions from fossil-fuel engines.
Burning fossil fuels is bad for pretty much everything except oil and gas company profits (and the tax they generate).
So the world has decided that internal combustion engines must go the way of the horse-drawn carriage and vanish from new car showrooms by 2030. Or maybe 2035.
Okay, call it 2050. Or failing that, 2060 at the very latest. Or
beyond that, so long as you offset all the carbon, okay?
As it is, the death of the ICE remains
a Mark Twain joke more than a fact, because people keep making and buying those vehicles. That means they keep needing autocats too, and those
autocats have needed ever-more platinum group metal so far this century, as the chart above from Johnson Matthey shows.
Yet while
platinum prices have gained 106% so far since New Year's Eve 1999, the white metal peaked way back in 2007 above $2200 before slipping and sliding back to around $900 as 2025 began.
Palladium did exactly the same, but with a very different path. Also starting the new century at $440 per ounce, it rose 105% across the first 25 years of the new millennium in Dollar terms. Yet palladium didn't peaking until 2022, some 15 years later than platinum, and it topped way higher at $3400 per Troy ounce, only to drop back to the $900 level at the end of last year, again returning to match its sister metal's price once more.
So while the net outcome for Pt and Pd was the same, almost down to the dollar, their paths were strikingly different from each other and also from silver or gold, too. Yet the fact remains that, for ICEs at least, platinum and palladium may have an important lesson for silver:
The PGMs are irreplaceable in autocatalysts.
Nothing else does the job so well. And thrifting by scientists trying to reduce the quantity used has hit rock-bottom, actually going into reverse, as higher environmental standards demand higher PGM loadings.
Now
think about silver in solar panels. Lots of people in labcoats are busy trying to reduce if not expel silver from that green-energy technology. But again, to date, silver hasn't been replaced, and thrifting has ground to a halt for now...
...also going into reverse overall, as more efficient new cells are developed...
...and driving total photo-voltaic demand for the former monetary metal
up to fresh record highs.
As for the PGMs, the cure for low prices might prove to be low prices, because...among scientists at least...research into new uses becomes much more likely when the stuff doesn't cost record-high prices.
Not the most bullish path forwards to 2050 perhaps, especially not with that 'net zero' deadline sitting somewhere around 25 years in the future and palladium really, really needing to find alternative uses as the death of the ICE maybe becomes a reality at last.
Little wonder then that sentiment, right now, is so undoubtedly weak. You know, like it was for gold back at New Year's Eve 1999.
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