Silver is Booming, Thanks in Part to Solar Power

Solar is a central part of the new electrical grid. In 2013, the global solar capacity was about 141 gigawatts. By the end of 2023, there were 1,419 gigawatts installed globally. Analysts expect solar to make up 80% of renewable energy growth over the next five years.We want exposure to that trend. We can do that through the metal that goes into every solar panel…silver. The industry averages about 0.64 ounces of silver per panel. That worked out to be 193.5 million ounces of silver in 2023 and approximately 232 million ounces in 2024. That’s nearly 20% of global silver demand.But silver is more than just an industrial metal. Humans used silver for money and jewelry from the first time they figured out how to get it out of rocks. It usually chases the gold price higher…but it has a long way to go right now. And that’s an opportunity for investors.As any silver bug will tell you, gold gets all the headlines. Silver bugs are speculators that usually lurk around the edges of big conferences. They will flash you a shiny ingot and tell you all the reasons why silver will outperform its yellow cousin.But silver always had one foot in precious metals and the other in industrial metals. Until the development of digital cameras, silver underpinned the entire photography industry. Once digital surged ahead, silver demand declined. Investors fled and the metal was relegated to the island of misfit investments.But that is changing.Precious metals are doing well right now. As we can see from the chart below, the gold price doubled from its recent low price in October 2022.

The price of silver followed suit:

However, silver just began to catch up. That’s a typical story with silver and gold. Gold moves first and then silver explodes. Silver outperformed gold spectacularly from 2005 to 2012:

We believe the current situation is similar. Going back to January 2022, gold outperformed silver. That’s the setup we find today:

Silver doesn’t consistently outperform gold over the long run. But as we saw in that 2005 to 2013 period, it is more volatile. It can go up much higher than gold. We measure that volatility using a gold to silver ratio. It measures how many ounces of silver you can buy with an ounce of gold. Historically that value is between forty-seven ounces and sixty-five ounces. Today, we are at an extreme:

The current value of 92.02 is far above the normal gold to silver ratio. We expect this to change over the next few months. The current gold price is around $3,350 per ounce today. To put the silver price back at the top of its historic range (65 ounces per ounce of gold), it would be around $51.50 per ounce. It’s currently $36.00 per ounce.
To reach the high end of the range of historic gold to silver ratios (45 ounces per ounce of gold), it would be around $75 per ounce. And we believe this could happen quickly.
For the Good,
The Mangrove Investor Team

Numbers You Need to Know

3000 BC

The earliest accounts of silver can be traced to 3,000 BC in modern-day Turkey, where its mining spurred trade in the ancient Aegean and Mediterranean seas. Traders and merchants would use hacksilver—rough-cut pieces of silver—as a medium of exchange for goods and services. (Mining.com)

1.2 billion oz

IThe Silver Institute projects demand for silver will remain healthy in the coming years, owing to an anticipated rise in consumption for industrial uses such as photovoltaics, electronics and electric vehicles. In 2025, global demand is expected to reach 1.2 billion oznville, Florida, Kona Skatepark opened in 1977 and is still running today.(Mining.com)

90%

The historic Morgan Silver Dollars minted from 1878 to 1921 contain 90% pure silver and 10% copper, giving them a durable composition suited for circulation. However, modern Morgan Silver Dollars, reintroduced in 2021, are crafted from 99.9% fine silver. (Govmint)

What’s New in Sustainable Investing

Sustainable investing at the crossroads

Sustainable investing is facing its toughest test yet. After years of rapid expansion, funds focused on environmental, social and governance (ESG) factors are seeing significant outflows, as political pushback, regulatory uncertainty and investor fatigue prompt a reassessment of these strategies. (Professional Wealth management)

Big Investors Still Supportive of Sustainable Investing

Much of the vitriol aimed at environmental, social and governance (ESG) investing appears to have died down — a positive for multiple reasons, not the least of which is that the party in power in Washington, DC was the one that led the anti-ESG crusade in recent years. (VettaFi)

Video Of The Week

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