MetalsVisionPrecious Metals News Sentiment & Macro Analysis

Usage Mix (Based on Public Data)

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Silver (Ag) is a precious metal that boasts physical properties uniquely superior to those of all other industrially utilized metals. The primary reasons and characteristics behind its industrial use are detailed below.

First is its "supreme electrical conductivity." Silver exhibits the lowest electrical resistance among all metals, boasting an outstanding conductivity that surpasses even copper and gold [9]. Because of this trait, it is indispensable in precision electronics where even the slightest power loss is unacceptable—such as in electrical contacts, switches, connectors, multi-layer ceramic capacitors (MLCCs), conductive pastes for ICs, mobile phones, and automotive electrical components [9].

Second is its "supreme thermal conductivity." Its ability to transfer not just electricity but heat ranks at the very top among metals, playing a vital role in heat sinks and cooling systems for electronic devices. In recent years, it has been heavily relied upon as a silver paste in photovoltaic (PV) solar panels, critical for thermal management as well as electrical collection [9].

Third is its "excellent light and heat reflectance." It has the highest reflectance for visible light among all metals (over 90%), and it also reflects 98% of infrared radiation [9]. Therefore, it is utilized as reflective material in lighting fixtures, thermal control films (insulation) in satellites, and as thin-film mirrors and optical coatings for telescopes [9].

Fourth is its "high malleability and ductility." It is the softest metal next to gold, making plastic deformation—such as rolling it incredibly thin (foil) or drawing it exceptionally fine (wire)—extremely easy [9]. This allows for its processing into complex-shaped contact materials and ultra-fine wiring [9].

Fifth is its "high corrosion resistance." As a noble metal, it does not react easily with oxygen, and its surface state remains stable. While it does have a tendency to tarnish by reacting with hydrogen sulfide in the air (sulfidation), this doesn't typically result in severe degradation of conductivity via oxidation, making it highly favored for silver plating on highly reliable electronic contacts [9].

Sixth is its "antibacterial and sterilizing power." Silver ions (Ag+) bond with the cell membranes and enzyme proteins of bacteria, destroying their functions to deliver a high sterilizing effect [9]. This property is applied to medical devices (coatings for bandages and catheters), filters for water treatment systems, antibacterial/deodorizing clothing, and even pharmaceuticals [9].

Lastly is its "chemical catalytic properties." It exhibits extremely high catalytic efficiency in specific chemical reactions. An prominent example is its widespread use as a catalyst in manufacturing ethylene oxide, a raw material for plastics and textiles, for which the process of recovering silver from spent catalysts is well established [9].

Reflecting these traits in the U.S. end-use consumption breakdown for 2023, barring physical investment (34%), advanced industrial applications dominate demand: electrical and electronics (27%), coins and medals (13%), photovoltaics (10%), jewelry and silverware (6%), and brazing alloys and solders (3%) [9].

To properly grasp the supply and demand dynamics in the silver market, there are specific structural circumstances that absolutely must be understood. Chief among these are the "complete lack of price elasticity" and its "production reality as a by-product."

In the contemporary silver market, industrial demand is growing to unprecedented levels, primarily fueled by the explosive expansion of the green economy—particularly solar photovoltaic technology. According to the Silver Institute's "World Silver Survey 2025," global industrial demand for silver in 2025 is forecast to grow 3% year-over-year, surpassing the 700 million ounce (Moz) mark for the very first time in history [10]. Normally, when demand spikes and prices jump (e.g., its historic high of surging from $57 to $83 per ounce), one would assume mining companies would go into overdrive to increase production. The same survey notes the average production cost at silver mines in 2024 was $14.58 per ounce, suggesting massive profit margins. However, in reality, silver production cannot increase dramatically.

The biggest reason for this is that over 70% of global silver production is generated as a "by-product" of mining other base metals. Looking at the breakdown of actual silver production, output from "primary silver mines"—where silver is the main target—accounts for a mere 28%. The rest is extracted as an incidental bonus from copper mining (approx. 28%), lead/zinc mining (approx. 23%), and gold mining (approx. 22%) [12]. The developmental goals and operational plans for a given mine are entirely dictated by the supply-demand balance and prices of its primary commodities (copper, lead, gold, etc.) which produce over 50% of the mine's revenue. Silver is merely a "bonus." No matter how high silver prices rocket, it is economically impossible to specifically increase the extraction of copper or lead solely to mine more silver [12]. Consequently, 70% of the world's silver supply is completely immune and unresponsive to price signals in the silver market.

Furthermore, there are reasons why production increases are unlikely even within the 28% generated by primary silver mines. Mining companies strategically prioritize preserving the lifespan of their mines (mine life) for as long as possible. When silver prices rise, mining companies do not ramp up the extraction of highly profitable, high-grade veins; instead, they prioritize extracting "low-grade" ore that was previously economically unviable. The most promising high-grade veins are preserved as an insurance policy for when prices inevitably drop, meaning a higher price does not trigger a higher absolute volume of silver extracted [16]. In fact, an analysis of 12 major primary silver mines (accounting for 16% of global production) over the past decade confirms a persistent downward trend in the average silver grade of the ore being mined [16].

Due to the profound mismatch between this "inelastic supply" and the "surging demand driven by the green economy," the silver market finds itself trapped in a structural deficit [10]. As of 2025, the market has recorded a physical deficit for five consecutive years. Above-ground inventories are heading toward depletion, and soaring lease rates—a classic indicator of physical tightness—are becoming the new normal. The core structural reality of the modern silver market is that both vigorous investment demand and massive industrial consumption are simultaneously slamming into a rigid supply ceiling [10].