Rama Krishna Sangem
Silver prices dropped a little – by Rs 7,000 a kg – a day after Dhanteras, or Dhana Triyodashi, when people worship Goddess Lakshmi. But, still silver continues to shine in the market as its prices will not drastically come down anytime soon. Some analysts predict its prices to go up to Rs 3 lakh per kg in next 3-4 years.
Last Deepavali festival, silver was selling for around Rs 1,10,000 per kilo. Within a year, buyers are shelling out over Rs 1,70,000 per kilo. Just a couple of days ago, the rates of silver per kg were over Rs 2 lakh in south India. This was the first time silver had reached this peak, not just in India but globally.
Silver price correction might have begun, with silver rates dropping by Rs 7,000 just a day after Dhanteras. But the big picture, according to a experts and a report by Motilal Oswal Financial Services Limited (MOFSL), points to a bull market that could last till 2030.
Silver’s rise in this year, up by 98% year-on-year, has prompted many to ask whether it is another speculative bubble like 1980 or 2011, when the prices of silver crashed.
The metal, unlike in the 1980s and 2011, has many more uses today. From EVs, to its use in modern semiconductors due to silver’s high conductivity, to its use in ultra-modern photovoltaic cells, industrial consumption now makes up nearly 59% of total silver use.
And global supply in the last seven years has lagged, with another deficit projected through 2027, according to the MOFSL report, titled: Silver, It’s Different This Time, published this month.
“Unlike the speculative spikes of the past, this rally is grounded in real-world demand from solar, electric vehicles (EVs), and electronics,” the report notes. Hence, silver has breached the critical $50 per ounce mark (or Rs 4,398.7 per 28.3 grams) and is holding above it for the first time.
Industrial demand adds shine
Silver’s biggest buyer today isn’t a jeweller, it’s the clean energy industry. The solar photovoltaic (PV) sector alone consumes 14-20% of global silver output, roughly 200 million ounces annually. By 2030, that could rise to 450 million ounces, or nearly one-fifth of global mine supply.
Every gigawatt of solar capacity needs around 500-600 kgs of silver. Despite attempts at “thrifting” (reducing the silver per panel), the sheer volume of solar expansion keeps demand high. “Technological efficiency gains still require higher purity inputs, so net demand [of silver] doesn’t really fall,” the report adds.
