In the past, silver was referred to as &#34;the poor man's gold&#34; not because it was truly cheap, but because the market never took its scarcity seriously.
With ample supply, adjustable inventories, and diverse uses— for a long time, the market firmly believed that regardless of demand fluctuations, silver could always be quickly replenished. Because of this, it could be repeatedly traded as a shadow of gold, yet it was almost never seriously allocated.
But this premise has been shattered by reality.
Since 2021, the global silver market has experienced a physical supply-demand gap for several consecutive years. Unlike previous short-term tensions amplified by financial cycles, this gap directly stems from the industrial side: the demand for silver in key areas such as photovoltaics, electrification, and high-end electronics is rapidly expanding, while supply is almost unable to accelerate.
Even more critically, the silver supply system is highly insensitive to price signals.
Over 70% of global silver production comes from by-products of other metals, with production rhythms determined by the investment cycles of copper, lead, and zinc, rather than the silver price itself. This means that even if prices rise, supply is difficult to ramp up quickly; when inventory buffers are continuously consumed, the market faces not just temporary fluctuations, but persistent constraints.
It is precisely at this moment that silver begins to truly break free from the narrative of &#34;the poor man's gold.&#34; It is no longer just a cheap substitute when gold rises, but is becoming a material that is continuously consumed by key industries and difficult to replace.
<h2>The &#34;Identity Dilemma&#34; of Silver: Caught Between Gold and Industrial Metals</h2>
To understand why silver has been long undervalued, one must first grasp its &#34;identity dilemma.&#34;
In the modern commodity system, assets can generally be divided into two categories:
One category is credit assets, with gold as a typical representative. The value anchor of gold does not come from industrial use, but from the credit system and reserve demand. Even in the weakest years of demand, the net purchases of gold by global central banks can still account for 15%-25% of annual total demand, providing a stable foundation for its price.
The other category is growth assets, such as copper, crude oil, and iron ore. These metals almost lack financial attributes, with their prices primarily driven by economic cycles, infrastructure, and manufacturing investments.
Silver, however, is caught precisely between these two.
According to the &#34;World Silver Survey 2025,&#34; the total global demand for silver in 2024 is projected to be 1.164 billion ounces (approximately 36,200 tons), of which:
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Industrial demand is 681 million ounces, accounting for about 58%;
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Jewelry and silverware demand is 263 million ounces, accounting for about 23%;
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Investment demand (silver bars, silver coins, ETFs) is about 191 million ounces, accounting for about 16%.
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The problem is that the behavioral patterns of these three types of demand are completely different:
Industrial demand relies on the industrial cycle, jewelry demand is highly price-sensitive, while investment demand is easily influenced by macro sentiment.
This structural split has led to a long-term lack of a stable, singular, dominant pricing anchor for silver
The result is reflected in the price, which means that silver has long been forced to rely on gold pricing.
A straightforward indicator is the gold-silver ratio. Over the past half century, the historical center of the gold-silver ratio has been roughly between 55 and 60; however, between 2018 and 2020, this indicator once broke through 90, and during the peak impact of the pandemic, it even approached 120.
Even against the backdrop of silver industrial demand reaching a historical high in 2024, the gold-silver ratio still maintains a long-term range of 80 to 90, significantly higher than the long-term average.
This does not mean that silver is &#34;useless,&#34; but rather that the market is still pricing silver using the financial logic of gold.
<h2>The Repositioning of Silver: From &#34;Diversified Use&#34; to &#34;Locked by Industry&#34;</h2>
The real change is not starting from the financial market, but quietly occurring from the industrial side.
In one sentence, the current change can be summarized as: Silver is transitioning from a diversified-use industrial metal to a functional material locked by key industries.
1. Photovoltaics: Silver has become &#34;indispensable&#34; for the first time
Photovoltaics are the most critical part of the change in silver demand structure.
In 2015, the global newly installed photovoltaic capacity was about 50GW; by 2024, this number has exceeded 400GW, growing more than 8 times in less than a decade.
The industry is indeed continuously &#34;de-silvering.&#34; The silver usage per watt has decreased from about 0.3 grams in the early days to around 0.1 grams under current mainstream technologies.
However, the speed of expansion in installed capacity far exceeds the decline in unit usage.
According to the &#34;World Silver Survey 2025,&#34; the actual demand for silver in the photovoltaic industry will reach 198 million ounces in 2024, an increase of more than 1.6 times compared to 2019, accounting for about 17% of global silver demand.
More critically, silver's position in photovoltaics is not &#34;easily replaceable.&#34; In terms of core indicators such as conductivity efficiency, long-term stability, and reliability, silver remains the optimal choice in terms of overall performance. Technological advancements change the usage, not the position.
This gives silver, for the first time, a large-scale, fast-growing, and price-insensitive source of demand.
2. Electric Vehicles and AI Infrastructure: Usage is not exaggerated, but replacement difficulty is extremely high
If photovoltaics bring certainty in demand scale, then electric vehicles and digital infrastructure bring a change in the nature of demand.
A traditional fuel vehicle uses about 15-20 grams of silver on average; while a new energy vehicle typically uses 30-40 grams of silver.
Against the backdrop of limited overall growth in global automobile sales, the penetration rate of new energy vehicles has increased from less than 3% in 2019 to nearly 20% in 2024, structurally raising silver demand.
At the same time, the demand for silver from data centers, AI servers, and high-end electronic devices is more reflected in their irreplaceability rather than absolute usage.
In 2024, the demand for silver in the electrical and electronic sectors will reach 461 million ounces, setting a historical high for several consecutive years
These application scenarios are relatively insensitive to price but extremely sensitive to supply stability.
<h2>The Reality on the Supply Side: Silver is Not a Metal That Can Increase Production Just by Raising Prices</h2>
In stark contrast to the certainty on the demand side is the rigidity on the supply side.
In 2024, global silver mine production is expected to be approximately 820 million ounces, with a year-on-year growth rate of less than 1%.
More importantly, over 70% of global silver production comes from by-products, primarily dependent on lead, zinc, copper, and gold mines. This structure has seen little substantive change over the past two decades.
Primary silver mine production is only about 228 million ounces, accounting for less than 30%, and is still in a long-term downward trend.
This means that silver production is not determined by silver prices but is dominated by the investment cycles of base metals.
<h2>From Cyclical Shortages to Structural Tightness</h2>
Looking back at history, silver has not been without bull markets, but past trends were mostly derivatives of financial cycles.
The difference is that since 2021, the silver market has seen a continuous physical supply-demand gap for several years.
According to the &#34;World Silver Survey 2025,&#34; the average annual supply-demand gap for global silver from 2021 to 2024 is approximately 150-200 million ounces, with a cumulative gap approaching 800 million ounces.
Moreover, the visible inventory of silver itself is not abundant. Currently, the global circulating inventory can only cover about 1-1.5 months of consumption, significantly below the 3-month safety line typically considered for commodities.
Once a large amount of silver enters photovoltaic components, electrical equipment, and infrastructure, it is difficult to return to the circulating market.
<h2>Silver is No Longer Just the Shadow of Gold</h2>
Silver has not suddenly become scarce; it has simply met three conditions for the first time:
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The demand scale is real and sustained
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Key uses are difficult to replace
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Supply growth is highly constrained
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In the past, these three points have never appeared simultaneously.
While the market still understands silver as &#34;the poor man's gold,&#34; the industry chain has begun to reassess it using the standards of critical functional materials.
Silver may still fluctuate, but one thing is certain: it is no longer just the shadow of gold.
And this is the most important and easily underestimated underlying change in this round of market trends.
References:
&#34;The Current Supply and Demand Characteristics of Silver and Historical Price Review,&#34; Founder Securities
&#34;World Silver Survey 2025,&#34; Silver Institute

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When the industrial chain begins to view silver as a "key material" rather than a "speculative product," the underlying logic of this round of market trends has fundamentally changed. The photovoltaic industry alone accounts for 17% of global demand, and the irreplaceability in fields such as electric vehicles and AI infrastructure has significantly increased. However, 70% of global silver comes from by-products, resulting in extremely rigid supply. This is the first time silver simultaneously meets three major conditions: large demand scale, difficulty in substitution, and limited supply, leading to a structural shortage

No longer the "gold of the poor," silver is being sought after by the times