More Than Precious: Silver’s Role in the New Energy Era (Part 3 of 3)
Silver’s Role in the New Energy Era (Part 3 of 3)
Silver is one of the first metals that humans discovered and used. Its extensive use throughout history has linked its name to its monetary value. However, as we have advanced technologically, so have our uses for silver. In the future, silver will see a surge in demand from solar and electric vehicle (EV) technologies.
Part 1 and Part 2 of the Silver Series showcased its monetary legacy as a safe haven asset as a precious metal and why now is its time to shine.
Part 3 of the Silver Series comes to us from Endeavour Silver, and it outlines silver’s role in the new energy era and how it is more than just a precious metal.
A Sterling Reputation: Silver’s History in Technologies
Silver along with gold, copper, lead and iron, was one of the first metals known to humankind. Archaeologists have uncovered silver coins and objects dating from before 4,000 BC in Greece and Turkey. Since then, governments and jewelers embraced its properties to mint currency and craft jewelry.
This historical association between silver and money is recorded across multiple languages. The word silver itself comes from the Anglo-Saxon language, seolfor, which itself comes from ancient Germanic silabar.
Silver’s chemical symbol, “Ag”, is an abbreviation of the Latin word for silver, argentum. The Latin word originates from argunas, a Sanskrit word which means shining. The French use argent as the word for money and silver. Romans bankers and silver traders carried the name argentarius.
While silver’s monetary meanings still stand today, there have been hints of its use beyond money throughout history. For centuries, many cultures used silver containers and wares to store wine, water, and food to prevent spoilage.
During bouts of bubonic plague in Europe, children of wealthy families sucked on silver spoons to preserve their health, which gave birth to the phrase “born with a silver spoon in your mouth.”
Medieval doctors invented silver nitrate used to treat ulcers and burns, a practice that continues to this day. In the 1900s, silver found further application in healthcare. Doctors used to administer eye drops containing silver to newborns in the United States. During World War I, combat medics, doctors, and nurses would apply silver sutures to cover deep wounds.
Silver’s shimmer also made an important material in photography up until the 1970s. Silver’s reflectivity of light made it popular in mirror and building windows.
Now, a new era is rediscovering silver’s properties for the next generation of technology, making the metal more than precious.
Silver in the New Energy Era: Solar and EVs
Silver’s shimmering qualities foreshadowed its use in renewable technologies. Among all metals, silver has the highest electrical conductivity, making it an ideal metal for use in solar cells and the electronic components of electric vehicles.
Silver in Solar Photovoltaics
Conductive layers of silver paste within the cells of a solar photovoltaic (PV) cell help to conduct the electricity within the cell. When light strikes a PV, the conductors absorb the energy and electrons are set free.
Silver’s conductivity carries and stores the free electrons efficiently, maximizing the energy output of a solar cell. According to one study from the University of Kent, a typical solar panel can contain as much as 20 grams of silver.
As the world adopts solar photovoltaics, silver could see dramatic demand coming from this form of renewable energy.
Silver in Electric Vehicles
Silver’s conductivity and corrosion resistance makes its use in electronics critical, and electric vehicles are no exception. Virtually every electrical connection in a vehicle uses silver.
Silver is a critical material in the automotive sector, which uses over 55 million ounces of the metal annually. Auto manufacturers apply silver to the electrical contacts in powered seats and windows and other automotive electronics to improve conductivity.
A Silver Intensive Future
A green future will require metals and will redefine the role for many of them. Silver is no exception. Long known as a precious metal, silver also has industrial applications metal for an eco-friendly future.
Charted: 30 Years of Central Bank Gold Demand
Globally, central banks bought a record 1,136 tonnes of gold in 2022. How has central bank gold demand changed over the last three decades?
30 Years of Central Bank Gold Demand
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Did you know that nearly one-fifth of all the gold ever mined is held by central banks?
Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.
However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.
The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.
Why Do Central Banks Buy Gold?
Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:
- Balancing foreign exchange reserves
Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil.
- Hedging against fiat currencies
Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation.
- Diversifying portfolios
Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.
The Switch from Selling to Buying
In the 1990s and early 2000s, central banks were net sellers of gold.
There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.
Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.
Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:
|Rank||Country||Amount of |
Gold Bought (tonnes)
|#7||🇸🇦 Saudi Arabia||180||3%|
The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.
Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.
Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.
Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.
Which Central Banks Bought Gold in 2022?
In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.
|Country||2022 Gold Purchases (tonnes)||% of Total|
Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.
Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.
According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.
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