ASX Silver Plays Are A Rarity

Will silver become a key component of the green transformation, potentially lifting the price out of the dumpster? While a harsh assessment, silver has not matched the gains of gold since 2020. There are reasons for this phenomenon.

Global demand for silver rose by 18% in to a record high of 1.24 billion ounces, creating a huge supply deficit, and predicting more shortages in the years to come.

Recent estimates are that women in India account for 11% of the world’s total gold reserves. This is about 18,000 tons of gold.

The silver market was undersupplied by 237.7 million ounces in 2022, the institute said in its latest World Silver Survey, calling this “possibly the most significant deficit on record”.

Demand for silver has since risen to record highs from all major users including jewellers, industry, and buyers of silver bars and coins.

So why hasn’t the silver price responded to the deficit? It’s largely range-bound around US$21-$25 an ounce.

According to the Institute, while visible silver inventories are falling, huge amounts of metal held by individuals and investors can still fill supply gaps.

Green economy

Record demand for silver from traditional sources hasn’t been enough to move the needle there are signs that photovoltaics might be a driver going forward.

A photovoltaic (PV) cell, commonly called a solar cell, is a nonmechanical device that converts sunlight directly into electricity.

Photovoltaic panels are installed for the conversion of thermal energy into electricity, while solar panels convert solar radiation into heat.

ANZ Bank economists expect photovoltaics to represent more than 50% of silver industrial demand by 2025, compared to about 20% in 2021.

The Silver Institute and Metal Focus group bumped up their estimate of silver uptake in solar panels, indicating usage of approximately 200 million ounces of silver for the year.

This represents a substantial increase from the approximately 110 million ounces used in 2021.

Bloomberg upgraded its global solar build forecast to 413 GW in 2023 – up 125% over two years, with China accounting for nearly 60% of the installed volumes.

Higher interest rates have also discouraged investment in precious metals holding the silver price lower.

As silver becomes an increasingly integral component of the green economy, should silver be on an investor’s watch list?

Beset with many false dawns, and investors licking their wounds it would be a brave forecaster to hitch the entire wagon.

For those itching to play the silver market, there are alternatives. Bear in mind, that the past performance has been below average.

ASX Silver Companies

Silver Mines (ASX: SVL) Share Price -34% (3 years), flat (1 year)

Investigator Resources (ASX: IVR) Share Price -60% (3 years), flat (1 year)

Another way to gain exposure to silver is through an Exchange Traded Fund (ETF). On the ASX, there are not many.

Exchange Traded Funds

Global X Physical Precious Metals Basket ETF (ASX: ETPMTM)

The ETF is not a pure-play silver, investing in physical gold, silver, platinum, and palladium. It has funds under management of $51 million.

Befitting its exposure to gold as well as silver the performance has been better than the pure play silver counters.

Over three years, it returned -1.26% while for the last year it was +0.61%.

The US iShares Silver Trust ETF (NYSE: SLV) is a pure play and has amassed $10,026 million in net assets. It invests in physical silver. Its three-year return is -3.99%, one year -1.14%.

It is not listed on the ASX but investors have access through most brokers or online fintech platforms.

There you have it. For investors looking for a thematic green story, there are alternatives.

 

 

 

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