Traders and Investors start out by figuring out the supply and demand of a product, early on. Silver and gold are especially sensitive topics. Factors that contribute to value over time include increasing value and the available supply. The demand for silver in the industrial sector is rising due to the new technology surrounding solar power and photovoltaic (PV) efforts.
Silver production remains lower than the demand and has for quite some time. This is a situation understood clearly by those intending to purchase. Silver was produced more than need be up to WWII. Silver was used for war necessities, but there remained a surplus of 10 billion ounces, despite the rising need.
The global supply of silver is now decreasing, however. The reduction rate as of 2010 is less than 1 billion ounces. This decline has joined the tripling of world population to numbers upwards of 7.5 million. The entrance of digital technology reduced the need for silver in photography based production. Otherwise, we might have seen a much larger decline in the existing supply.
READ ALSO: Do Hydrogen Fuel Cell Cars Have a Future Next to Plug-in Cars?
The new green technology, however, has upped the demand for silver, once again. The solutions this technology offers, however, is very eco-sensitive, such as photovoltaics. Photovoltaics is a chemical process that turns sunlight into electricity. This concept makes solar panels successful. Silver, however, is an important part of the construction of these mechanisms.
Twenty grams of silver is necessary for each solar panel. This equals 2/3 of an ounce. To understand this better, consider that cell phones and laptops only use 200 milligrams. Consumption of silver is now steadily increasing. The year 2011 brought the need for 60 million ounces just for PV necessities. Now that solar panels are becoming more affordable for consumers; the silver demand is growing, according to the Solar Energy Industries Association.
Photovoltaic technology is opening the doors to different types of applications regarding technology. The resulting decrease production costs are the motivating factor. Solar panels are just the beginning.
A conference in March of 2016 brought a statement by the director of the Energy Department’s National Renewable Energy Laboratory (NREL). It was stated that “PV is on a pathway to low cost…When you add PV to inexpensive storage or another means of introducing flexibility into the grid, PV can be attractive as a primary energy source.”
The silver market seems to have not yet caught up with the rising demand. It is thought that some production plans may need to be brought into play at some point in the near future.
