{"id":6255,"date":"2024-12-15T04:23:45","date_gmt":"2024-12-15T04:23:45","guid":{"rendered":"https:\/\/www.incredmoney.com\/blog\/?p=6255"},"modified":"2025-01-23T12:19:55","modified_gmt":"2025-01-23T12:19:55","slug":"all-that-glitters-is-not-gold-it-can-also-be-silver","status":"publish","type":"post","link":"https:\/\/devblog.incredmoney.com\/blog\/all-that-glitters-is-not-gold-it-can-also-be-silver\/","title":{"rendered":"All that glitters is not Gold, it can also be Silver"},"content":{"rendered":"<p>Whenever we talk about these two precious metals, it\u2019s always \u201cgold and silver\u201d or &#8220;sona-chandi&#8221; &#8211; with gold leading the way and silver following. Even in investment conversations, gold dominates. But lately, silver seems to be stepping out of the shadows and having its own \u2018golden\u2019 moment.<\/p>\n<p>Let me explain why.<\/p>\n<p>Since ancient times, both silver and gold have served as currency and stores of value. Like its &#8220;big brother,&#8221; silver is also a safe-haven asset, often moving inversely to equities. But what sets silver apart is its dual identity: <strong>a precious metal and an industrial workhorse.<\/strong><\/p>\n<p>But why did I say that Silver may be having its golden moment?<\/p>\n<p>There are strong structural trends that are driving silver\u2019s appeal. In this newsletter, we\u2019ll delve into the key factors driving its demand, examine the dynamics shaping its supply, and assess the potential risks involved.<\/p>\n<p>And do stick around till the end\u2014I\u2019ll also share the smartest strategies for investing in silver today.<\/p>\n<h2>The Demand-Supply Equation<\/h2>\n<p>Like any asset, silver\u2019s price hinges on demand and supply. And in recent years, demand has been consistently outpacing supply\u2014a shift from earlier trends.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone wp-image-6256\" src=\"https:\/\/www.incredmoney.com\/blog\/wp-content\/uploads\/2025\/01\/the-demand-supply-equation.webp\" alt=\"\" width=\"400\" height=\"466\" \/><\/p>\n<h2><b>But what\u2019s driving this demand:<\/b><\/h2>\n<p><img decoding=\"async\" class=\"alignnone wp-image-6258\" src=\"https:\/\/www.incredmoney.com\/blog\/wp-content\/uploads\/2025\/01\/but-whats-driving-this-demand.webp\" alt=\"\" width=\"409\" height=\"429\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Silver has traditionally been used in jewellery and silverware, especially in markets like India, where this demand has remained steady. But the real story lies in its growing role as an industrial metal.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Between 2015 and 2024, total silver demand has risen by 14%. Within this, industrial demand has surged by a staggering 55%, driven by two key industries:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Solar Energy:<\/b><span style=\"font-weight: 400;\"> Silver is indispensable in solar panels, thanks to its unparalleled conductivity and resistance to oxidation (a problem with copper). Each solar panel uses about 20 grams of silver. With the clean energy push, <\/span><i><span style=\"font-weight: 400;\">demand from solar panels now accounts for roughly 20% of total silver consumption<\/span><\/i><span style=\"font-weight: 400;\">. This share will keep increasing with an increase in solar panel demand.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Electronics and EV Infrastructure:<\/b><span style=\"font-weight: 400;\"> Silver\u2019s use in electrical gadgets and EV charging infrastructure is another significant growth area. As these sectors expand, silver\u2019s industrial demand is set to rise further.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">And hence this increase in demand looks like a structural story.<\/span><\/p>\n<h2><b>Supply Constraints:<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">But here\u2019s the catch: silver supply isn\u2019t keeping pace. For four consecutive years, the silver market has been in deficit.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone wp-image-6259\" src=\"https:\/\/www.incredmoney.com\/blog\/wp-content\/uploads\/2025\/01\/supply-constraints.webp\" alt=\"\" width=\"481\" height=\"244\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">An interesting thing to note is that over 70% of silver is mined as a by-product of other metals like gold, copper &amp; zinc. India\u2019s biggest miner of silver is in fact <\/span><i><span style=\"font-weight: 400;\">Hindustan Zinc<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As you can see from the above table, silver mining is down 8% from 2015 to 2024. Even though recycling has grown by 22% over the same period, its contribution to overall silver supply is not very substantial.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This persistent demand-supply imbalance is why many analysts are calling for a potential silver supercycle.<\/span><\/p>\n<h2><b>What About the Gold-Silver Ratio?<\/b><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-6260\" src=\"https:\/\/www.incredmoney.com\/blog\/wp-content\/uploads\/2025\/01\/what-about-the-gold-silver-ratio.webp\" alt=\"\" width=\"467\" height=\"288\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">An interesting metric to watch is the gold-silver ratio \u2014 how many ounces of silver it takes to buy one ounce of gold.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This ratio shifts based on investor sentiment and market fundamentals. Right now, it\u2019s skewed in favor of gold. But as silver\u2019s fundamentals are strengthening, we could see this ratio move in silver\u2019s favor, drawing more investor interest.<\/span><\/p>\n<p><b>While all the above look very positive, there are risks of course.<\/b><\/p>\n<p><b>Substitution in Solar Panels<\/b><b>:<\/b><span style=\"font-weight: 400;\"> Researchers are actively exploring copper as a substitute for silver in solar panels. While no breakthroughs have been made yet, this remains a potential headwind.<\/span><\/p>\n<p><b>Price Caps from Recycling and Mining:<\/b><span style=\"font-weight: 400;\"> If silver prices rise too high, it could incentivize more recycling of existing silver (jewellery, coins, bars) and make mining new silver viable, which might limit price gains.<\/span><\/p>\n<h2><b>Making place for Silver in a portfolio<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">While gold is often seen to be a strategic part of one\u2019s portfolio, silver\u2019s fundamentals are making a compelling case for it to be included too. Silver also doubles as a proxy play to the whole Solar and EV play. Both these metals have given an average return of <\/span><a href=\"https:\/\/bullions.co.in\/\"><span style=\"font-weight: 400;\">14\u201315%<\/span><\/a><span style=\"font-weight: 400;\"> in INR terms from 2020 to date.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Traditionally, silver investments meant jewellery or physical bullion like coins and bars. But these come with inefficiencies like 3% GST, making charges, and storage hassles.<\/span><\/p>\n<p><b><i>Silver ETFs<\/i><\/b><span style=\"font-weight: 400;\"> solve this problem to a large extent. These funds are backed by physical silver held by the asset management company (AMC), and they offer easy liquidity for buying or selling. While there\u2019s a small management fee, the convenience and cost-effectiveness are worth it, in my opinion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can also consider analysing silver mining companies like Hindustan Zinc in India or global players such as Glencore, Fresnillo, or BHP. However, keep in mind that for many of these companies, silver mining forms only a small part of their overall business. This makes them less effective as a direct proxy for silver investments.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That said, Hindustan Zinc is reportedly planning to <\/span><a href=\"https:\/\/www.thehindubusinessline.com\/companies\/hindustan-zincs-demerger-plan-will-unlock-value-amid-soaring-silver-prices-arun-misra-ceo\/article68798991.ece#:~:text=The%20demerger%20proposal%20includes%20having,be%20value%20accretive%20for%20all.\"><span style=\"font-weight: 400;\">demerge its silver operations<\/span><\/a><span style=\"font-weight: 400;\"> into a separate entity. If that happens, it could emerge as a more focused and efficient play on silver.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Silver may still be the underdog compared to gold, but its unique mix of industrial demand and precious metal appeal makes it a compelling tactical play \u2014 especially in the age of solar energy and electric vehicles.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">So, what do you think? Is silver ready to shine in your portfolio?<\/span><\/i><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">I hope you enjoyed this newsletter and if you did, feel free to share it with your friends and family!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also, if you have any topics that you would like us to cover or any other feedback, do write to us at <\/span><a href=\"mailto:connect@incredmoney.com\"><span style=\"font-weight: 400;\">connect@incredmoney.com<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Till the next time,<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Vijay<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Whenever we talk about these two precious metals, it\u2019s always \u201cgold and silver\u201d or &#8220;sona-chandi&#8221; &#8211; with gold leading the way and silver following. Even in investment conversations, gold dominates. But lately, silver seems to be stepping out of the shadows and having its own \u2018golden\u2019 moment. Let me explain why. Since ancient times, both [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":6471,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[5],"tags":[2],"class_list":["post-6255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","tag-blog"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>All that glitters is not Gold, it can also be Silver - InCred Money<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/devblog.incredmoney.com\/blog\/all-that-glitters-is-not-gold-it-can-also-be-silver\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All that glitters is not Gold, it can also be Silver - InCred Money\" \/>\n<meta property=\"og:description\" content=\"Whenever we talk about these two precious metals, it\u2019s always \u201cgold and silver\u201d or &#8220;sona-chandi&#8221; &#8211; with gold leading the way and silver following. Even in investment conversations, gold dominates. But lately, silver seems to be stepping out of the shadows and having its own \u2018golden\u2019 moment. Let me explain why. 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