Alternative Energy Demand Should Power Up Silver Prices
Thu April 11 2024
The global transition to alternative energy should power up silver prices given the metal’s inclusion in various clean energy technologies. That industrial-precious metal component offers investors the opportunity to obtain exposure to an asset that serves both purposes.
The metal’s application in electric and solar power technology will add a growth factor as nations look to reach their emissions goals. The electric vehicles (EVs) industry will hopefully see demand catch up to supply, adding a growth factor in that regard. And solar power, in particular, has seen tremendous growth in the last 10 years.
“Silver, as you know, is a great conductor of electricity,” said Sprott senior portfolio manager Maria Smirnova in a Sprott Radio Podcast. “Electronics and electrical applications represent a very large amount. Of course, we discuss solar photovoltaics as a very important application, and that’s something we focus on because that’s a very fast-growing segment. In fact, over the last 9 to 10 years, solar has grown about 16% per year on average. Last year, it reached almost 190 million ounces.”
And furthermore, the growth isn’t stopping for solar power, as Sprott projects even more growth in the next five years or so.
“I think investment in solar will continue,” added Smirnova. “We’ve made projections and published an article stating that by 2030, we think that silver use in solar alone could easily reach 300 million ounces.”
2 Ways to Obtain Silver Exposure
Sprott funds offer prospective investors a way to get exposure to the metal in a pair of ways. One is via the directly with the option of converting shares of the fund to actual silver bullion. Another pairs up silver with gold. If gold makes a move to the upside, the white metal could potentially follow.
For the former, consider using the Sprott Physical Silver Trust (PSLV). The fund provides exposure to the precious metal without the additional hassle of storing it. It invests in unencumbered and fully allocated London Good Delivery (LGD) silver bars. As mentioned, shareholders can redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions).
If gold continues its climb higher and silver subsequently follows, investors don’t need separate capital allocated to both. They can receive exposure via one fund using the Sprott Physical Gold and Silver Trust (CEF). The fund is a closed-end trust that invests in unencumbered and fully allocated physical gold and silver bullion in LGD bar form. Overall, the goal of CEF is to provide a secure, convenient, and exchange traded investment alternative for investors who want to hold physical gold and silver without the inconvenience typical of a direct investment in physical bullion.
Source: https://www.etftrends.com/