No Longer "Poor Man's Gold," Silver Is Becoming Essential for the Modern Era

Historically, silver earned the moniker "poor man's gold" not because it was genuinely cheap, but because the market never took its scarcity seriously. With ample supply, adjustable inventories, and dispersed uses—for a very long time, the market held a firm belief: regardless of demand fluctuations, silver could always be quickly replenished. Consequently, it was traded repeatedly as a shadow of gold but was almost never seriously allocated. However, this foundational premise has been shattered by reality. Since 2021, the global silver market has experienced a physical supply-demand deficit for multiple consecutive years. Unlike previous short-term tightness amplified by financial cycles, this current gap stems directly from the industrial sector: demand from key areas such as photovoltaics, electrification, and high-end electronics is expanding rapidly and simultaneously, while supply can scarcely accelerate. More critically, silver's supply system is highly unresponsive to price signals. Over 70% of global silver production comes as a by-product of other metals, with the production pace dictated by the investment cycles of copper, lead, and zinc, rather than the price of silver itself. This means that even if prices rise, supply cannot be rapidly increased; as inventory buffers are continuously depleted, the market faces not a temporary fluctuation, but a persistent constraint. It is precisely at this juncture that silver is beginning to truly shed the "poor man's gold" narrative. It is no longer just a cheap alternative when gold rises, but is transforming into a material that is continuously consumed by key industries and is difficult to replace. Silver's "Identity Dilemma": Caught Between Gold and Industrial Metals To understand why silver has long been undervalued, one must first grasp its "identity dilemma." In the modern commodity system, assets can broadly be divided into two categories: One category consists of credit-based assets, with gold as the classic example. Gold's value anchor does not come from industrial utility, but from the credit system and reserve demand. Even in the weakest years for demand, global central banks' net purchases of gold can still account for 15%–25% of total annual demand, providing a stable foundation for its price. The other category comprises growth-oriented assets, such as copper, crude oil, and iron ore. These metals possess almost no financial attributes; their prices are primarily driven by economic cycles, infrastructure, and manufacturing investment. Silver, however, is awkwardly positioned between these two. According to the "World Silver Survey 2025," total global silver demand in 2024 was 1.164 billion ounces (approximately 36,200 tonnes), of which: Industrial demand was 681 million ounces, accounting for about 58%; Jewelry and silverware demand was 263 million ounces, accounting for about 23%; Investment demand (bars, coins, ETFs) was approximately 191 million ounces, accounting for about 16%. The problem lies in the fact that these three types of demand follow completely different behavioral patterns: Industrial demand relies on industry cycles, jewelry demand is highly price-sensitive, and investment demand is extremely prone to entering and exiting with macroeconomic sentiment. This structural fragmentation has long left silver without a stable, singular, dominant pricing anchor. The result, reflected in its price, is that silver has long been forced to rely on gold for pricing. A clear indicator is the gold-to-silver ratio. Over the past half-century, the historical median for this ratio has been roughly 55–60; but between 2018–2020, the ratio once exceeded 90, and even approached 120 at the peak of the pandemic shock. Even against the backdrop of silver's industrial demand hitting a record high in 2024, the gold-to-silver ratio has persistently remained in the 80–90 range, significantly above its long-term average. This is not because silver has become "useless," but because the market continues to price silver using gold's financial logic. Silver's Repositioning: From "Dispersed Uses" to "Locked In by Industry" The genuine transformation did not begin in the financial markets but is quietly unfolding on the industrial side. To summarize the current shift in one sentence: Silver is transitioning from an industrial metal with dispersed applications to a functional material locked in by key industries. 1. Photovoltaics: Silver Becomes "Indispensable" for the First Time Photovoltaics represent the most critical factor in the changing structure of silver demand. In 2015, global newly installed PV capacity was about 50GW; by 2024, this figure had surpassed 400GW, growing more than 8-fold in under a decade. The industry has indeed been persistently working on "silver thrifting." Silver usage per watt has decreased from about 0.3 grams in earlier stages to around 0.1 grams with current mainstream technologies. However, the rate of capacity expansion has far outpaced the reduction in usage per unit. According to the "World Silver Survey 2025," actual silver demand from the PV industry reached 198 million ounces in 2024, an increase of over 160% compared to 2019, accounting for approximately 17% of total global silver demand. More crucially, silver's position in photovoltaics is not one of being "easily substitutable." In terms of core metrics like conductive efficiency, long-term stability, and reliability, silver remains the option with the best overall performance. Technological progress has changed the method of use, not the status. This gives silver, for the first time, a demand source that is large-scale, fast-growing, and relatively price-insensitive. 2. Electric Vehicles and AI Infrastructure: Usage Not Extreme, but Substitution Highly Difficult If photovoltaics provide certainty in terms of demand scale, then electric vehicles and digital infrastructure bring a change in the nature of demand. A traditional internal combustion engine vehicle uses approximately 15–20 grams of silver on average; whereas a new energy vehicle typically uses 30–40 grams of silver. Against the backdrop of limited overall growth in global vehicle sales, the penetration rate of new energy vehicles has risen from less than 3% in 2019 to nearly 20% in 2024, structurally elevating silver demand. Simultaneously, the demand for silver from data centers, AI servers, and high-end electronic devices is reflected more in its irreplaceability than in absolute volume. In 2024, silver demand from the electrical and electronics-related sectors reached 461 million ounces, setting new historical records for multiple consecutive years. These application scenarios are relatively price-insensitive but are extremely sensitive to supply stability. The Reality on the Supply Side: Silver is Not a Metal Where "Higher Prices Lead to More Production" In stark contrast to the certainty on the demand side is the rigidity on the supply side. In 2024, global silver mine production was approximately 820 million ounces, with a year-on-year growth rate of less than 1%. More importantly, over 70% of global silver production originates as a by-product, primarily dependent on lead, zinc, copper, and gold mines. This structure has seen almost no substantive change over the past two decades. Primary silver mine production was only about 228 million ounces, accounting for less than 30% of the total, and remains in a long-term declining trend. This means that silver production is not determined by the silver price but is dominated by the investment cycles of base metals. From Cyclical Shortage to Structural Tightness Looking back at history, silver has experienced bull markets before, but past rallies were mostly derivatives of financial cycles. The difference now is that since 2021, the silver market has seen a physical supply-demand deficit for multiple consecutive years. According to the "World Silver Survey 2025," the average annual physical deficit in the global silver market from 2021–2024 was approximately 150–200 million ounces, with a cumulative deficit nearing 800 million ounces. Furthermore, visible silver inventories themselves are not abundant. Current global above-ground stocks can only cover about 1–1.5 months of consumption, significantly below the commonly accepted 3-month safety line for commodities. Once large quantities of silver are incorporated into PV modules, electrical equipment, and infrastructure, they are difficult to return to the circulating market. Silver is No Longer Just Gold's Shadow Silver has not suddenly become scarce; it is simply the first time it simultaneously satisfies three conditions: The demand scale is real and persistent. Its key applications are difficult to substitute. Supply growth is highly constrained. In the past, these three conditions never appeared together. While the market still tries to understand silver through the lens of the "poor man's gold," industrial chains have already begun to reassess it by the standards of a critical functional material. Silver may still experience volatility, but it is certain that it is no longer merely gold's shadow. And this is the most important, yet most easily underestimated, fundamental change underlying the current market cycle.