Silver (Silver) - A overlooked hybrid asset and a long-term speculative opportunity

Why Silver is No Longer Just the “Poor Man’s Gold”

In recent years, Silver prices have once again highlighted its importance to investors worldwide. Not just because it is a traditional precious metal, but because Silver has become a key component of Megatrends shaping the world—from solar energy, electric vehicles, 5G networks to AI technology.

What sets Silver apart from gold the most is that about 59% of its demand comes from the industrial sector, not from investment or store of value. This means that Silver prices are not driven solely by market psychology but are also influenced by an old unresolved issue: insufficient supply to meet demand.

The History of Silver: From Real Money to Essential Industrial Commodity

In reality, Silver has served as a medium of exchange for over 4,000 years before paper money existed.

• Since 3000 BC, ancient civilizations used Silver in the form of coins and bars with standard weights.
• In the 16th century, Spain mined Silver from the Americas, and Silver coins became the world’s first global currency, accepted on every continent.
• Although the Silver Standard was abandoned in 1935 and Silver is no longer official currency, today Silver coins are still produced for investment.

The Physical Properties of Silver That Make It the “Material of the Future”

Silver’s uniqueness is not just about price but its intrinsic properties, which no other element can replace:

Best conductor of electricity and heat in nature → making it a vital component in nearly all electronic devices, smartphones, computers, lighting, and solar panels.

Highest reflectivity → used in solar cells to enhance light-to-electricity conversion efficiency.

Antibacterial properties → applied in medical fields, from burn dressings, surgical tools, to water filtration systems.

Ductility and easy to process → crucial for microchip components and small-scale electronics.

All these factors align perfectly with the current global transition: clean energy, electric vehicles, digital infrastructure, and AI—all of which depend on Silver inevitably.

Supply Challenges: The Persistent “Structural Deficit”

The World Silver Survey 2025 reveals a concerning picture: the Silver market has been facing a structural deficit for four consecutive years.

This means—simply—that the world is consuming more Silver than can be produced and recycled combined.

Demand side: Industrial demand hit a record 680.5 million ounces in 2024, accounting for 59% of total demand. This demand comes from:

• Solar panels
• Electric vehicles
• Electronics and 5G networks
• AI technology

Supply side: Production cannot keep up due to:

• Disruptions in mining, mainly by-products from other mines (lead, zinc, copper)
• Depletion of global inventories
• Structural inflexibility

Many analysts see this as a “Perfect Storm”—a situation that could force Silver prices to rise to new highs in history because there are no alternative options.

Gold vs Silver: Not Just About Price

Comparing Silver with gold reveals fundamental differences that explain why Silver might generate entirely different returns.

Gold/Silver Ratio: Indicator of overvaluation/undervaluation

The “Gold/Silver Ratio” (GSR) tells you how many ounces of Silver are needed to buy 1 ounce of gold:

• In March 2020 (COVID-19 crisis), the ratio soared to 124:1 as investors flocked back to “gold,” considered the safest asset.
• In 2011 (peak confidence), the ratio dropped to 31:1 as investors took on risk and turned to Silver for higher returns.
• Currently (2025), the ratio is around 84:1, still above the historical average, indicating Silver remains undervalued relative to fundamentals.

Market Structure Differences

Market size:

• Gold market ≈ $30 trillion
• Silver market ≈ $2.7 trillion

Silver’s market is less than one-tenth the size of gold, meaning smaller capital flows can cause larger price movements.

Volatility:

• Silver is 2-3 times more volatile than gold. This is a double-edged sword:
  • In bear markets, Silver can decline more sharply.
  • In bull markets, Silver can surge faster and higher.

Role in portfolio:

• Gold = risk hedge asset (central banks hold 30% of total supply)
• Silver = hybrid (safe + industrial); central banks hold almost none.

Its connection to economic cycles is clear, but it is also linked to Megatrends of growth.

4 Ways to Start Investing in Silver for Market Savvy Investors

1. Physical Silver Ownership

Method: Buy silver bars (Bars) or coins (Coins) and store them.

Advantages:

• Actual ownership, tangible asset
• No counterparty risk
• High privacy

Disadvantages:

• High initial investment
• Premiums on purchase/sale
• Hidden costs: storage, insurance
• Low liquidity
• Risks in verifying purity

2. Investing via Mining Funds and Stocks

Method: Invest through:

• Mutual funds investing in Silver Mining Companies worldwide
• Direct stocks of major producers like Pan American Silver, Wheaton Precious Metals, Fresnillo, Hecla Mining

Advantages:

• High liquidity, easy trading on stock exchanges
• No storage worries
• Benefit from company growth

Disadvantages:

• Company-specific risks
• Management, production costs, political risks
• May not move in perfect sync with Silver prices 100%

3. Futures Market

Method: Trade Silver futures contracts via TFEX (Thai Futures Exchange)

Advantages:

• Low initial capital (High leverage)
• Profit in both rising and falling markets
• Cash settlement

Disadvantages:

• Very high risk
• Complex, requires experience
• Contract expiration dates

4. CFD Contracts (Contract for Difference)

Method: Trade Silver (XAGUSD) via CFD brokers without owning the physical asset

Advantages:

• Low capital requirement (Flexible leverage)
• High flexibility, open/close anytime during trading hours
• Profit in both directions
• No hidden costs (no storage)
• High liquidity

Disadvantages:

• Leverage risk
• Counterparty risk (must choose reputable brokers)

Opportunities and Risks in Silver Investment

Opportunities

1. Potentially higher returns than gold: Due to volatility and high GSR, Silver can generate higher percentage gains in bullish markets.

2. Strong and sustained industrial demand: Megatrends in clean energy, electric vehicles, digital tech, and AI are long-term trends unlikely to reverse.

3. Affordable price per ounce: Many times cheaper than gold, making it more accessible for retail investors.

4. Inflation hedge asset: Like gold, Silver has a long history of preserving value and protecting against currency devaluation.

Risks

1. High volatility: Massive gains and sharp losses are inherent to Silver; risk acceptance must be higher than gold.

2. Economic sensitivity: Since 59% demand is industrial, economic slowdown could rapidly reduce demand.

3. Physical holding costs: Storage, insurance, security.

4. No passive income: No dividends or interest; returns come solely from price movements.

Summary: Who Should Consider Investing in Silver?

Silver is not just a “lesser” precious metal. It is an asset evolving with the world, requiring a transition toward clean energy and digital technology.

Suitable for:

• Investors with higher risk tolerance
• Those with medium-term horizon (1-3 years)
• Believers in clean energy and digital Megatrends
• Diversifiers seeking more than just gold in their portfolio

Not suitable for:

• Investors seeking maximum stability (gold is better)
• Those uncomfortable with high volatility
• Those looking for passive returns (dividends/interest)

Before investing, consider:

• Your investment goals
• Your risk appetite
• Investment horizon
• Suitable investment methods based on your situation

The Silver market is complex, but the fundamentals are clear: supply is insufficient, demand is rising, and this situation is likely to persist for years. Investors who understand this and accept the risks may find significant opportunities to build wealth in this era of change.