Hello everyone…
I talked about my view on gold in my previous article and mentioned about money finding its way into another commodity – Silver.
Do you have Silver in your portfolio?
Before we look at the future prospects, let’s talk about the performance of silver in the last 12 months. In May 2020, silver was trading around INR 41,600 / Kg or USD 17.2 / ounce. Today a year later it is approx. INR 71,200 / Kg or USD 27.8 / ounce an increase of 62% in US Dollar terms. No wonder the money printed by Central Banks world over in the peak of the pandemic last year has clearly found its way into commodities and silver is not an exception.
We are seeing that the countries across the world are concerned about the climatic changes happening and a lot of focus is on reducing carbon footprints. There is a lot of push for clean, greener fuels and energy and the next decade is going to be a decade of solar energy and electric vehicles. We have already seen how Adanis, Tatas, and every small and big auto/two-wheeler manufacturer in India is planning to set up solar plants and e-vehicle manufacturing facilities.
The state of Gujarat in India has already set a target of producing 30,000 MW of green energy through wind and solar projects. In December 2020, Prime Minister Narendra Modi laid the foundation stone for this 30-gigawatt (GW) or 30,000 megawatt (MW) power project in Kutch, Gujarat. This will be world’s largest solar power park, yes you heard it right… world’s largest solar park. If all goes according to plan, the park will be able to generate 15 GW of energy by 2024.
According to one report the India Electric Vehicle Market is expected to reach USD 47 billion by 2026 registering a CAGR of 44% from 2021 to 2026.
Hey guys, why am I talking about renewable energy, solar projects, e-vehicles, batteries, etc and how is all this related to silver? Here comes the real game.
The average solar panel of approx. 2 square meters can use up to 20 grams of silver. There’s a silver paste in the solar photovoltaic (PV) cells that collects the electrons generated when the sunlight hits the panel. Because of silver’s high conductivity, it maximally converts sunlight into electricity. Silver is extensively used in electric vehicle technologies and in the silver-zinc battery. Long known as a precious metal, silver also finds a role in industrial applications especially the electronics industry.
As the world adopts solar photovoltaics and e-vehicles and if India executes its renewable energy and e-vehicle goal as per plan then we can’t even imagine the quantity of silver that will be in demand in near future.
As the country is committed to achieving its clean, green energy goal, I see silver outperforming gold in the coming months. I will not be surprised if the price of silver in India in the next 1 year goes up to INR 85,000 / Kg in anticipation of higher demand.
Hope you have found this article useful. Happy Investing!
Warm regards,
Mayank Talwar