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The Silver Series: Making The Case For Silver (Part 4 of 4)

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Making the Case for Silver as an Asset

Part 1: The Many Phases of SilverPart 2: Who Controls The World's Silver Supply?Part 3: The World's Growing Demand For SilverPart 4: Making The Case For Silver

2015 Silver Series Part 4: Making The Case For Silver

In the previous parts of The Silver Series, we’ve shown that silver has a rich and multi-faceted history with applications in money, health, and technology. We’ve covered the metal’s supply and geological origins, as well as the growing demand stemming from industry, investment, and other areas.

However, the real question for investors boils down to this: is it worth it to hold silver bullion or equities in a portfolio?

Silver and Gold

The two major precious metals are alike in many ways. They’ve both been used as money for thousands of years, and both are considered a store of wealth today. However, to understand the nuances of silver as an asset, it is important to keep in mind a couple of key differences that it holds from the yellow metal.

The most obvious difference is that silver is used much more widespread in industry than gold. Approximately 50% of all demand stems from technological applications like photovoltaics, automobiles, batteries, and other such uses. This gives silver a potentially wider range of demand triggers.

The other major difference is that in comparison to the gold market, silver trades thinly and with much higher volatility. In 2014, there was $20.4 billion of demand for physical silver and $159.7 billion demand for physical gold. Even more interesting, these physical markets are less than 1% the size of the total markets when factoring paper trades like derivatives, futures contracts, and options.

Silver typically hits higher highs and lower lows than gold. To the savvy investor, this creates great opportunity.

Why Own Silver?

The reasons an investor should consider exposure to silver can be summed up with three key points.

1. Diversification.

Silver has little or no correlation with most asset classes such as bonds, stocks, or real estate. This is because silver prices move based on supply and demand, but also because of other factors such as the global economic environment, futures market speculators, currency markets, the level of inflation or deflation, and central bank policy decisions. Even though silver itself is more volatile than many other asset classes, it does help reduce the overall risk of a portfolio by having less correlation to other asset classes. Over the last eight years, silver’s correlation to treasuries and bonds have been basically zero (-0.07 and 0.08 respectively). It has slightly higher correlation with US equities (0.23) and real estate (0.13).

2. Safe Haven

When the times get tough, silver is your friend. Even in the most challenging environments it holds its value or bucks the negative global trends.

How did silver do in the four years surrounding the Financial Crisis? Over a period where US equities, emerging markets, and REITs were down, silver more than doubled in value from 2007-2011.

3. Fundamentals and Value

The fundamental numbers around silver make it quite clear that silver could provide extreme value as an investment. Here are some key numbers:

  • In the earth’s crust, there is 1 gram of silver for every 12.5 tonnes of rock.
  • For centuries since ancient times, the gold-to-silver ratio was 15 to 1. That means 1 oz of gold could buy 15 oz of silver.
  • In the earth’s crust, there is 19x more silver than gold by mass.
  • The “modern” gold-to-silver ratio is closer to 50 to 1.
  • Yet, in mid-2015 the ratio is 75 to 1, which means silver could be very undervalued relative to gold.
  • The silver price, in terms of USD, is also at its lowest point in five years.
  • Silver miners are even cheaper, trading at their lowest valuation in years.

Silver, the metal itself, continues to have the same impressive properties, supply and demand fundamentals, and a rich history as money. What has changed is what people are willing to pay for it at a given time.

Right now it seems that silver is being sold for half price.

That’s the end of our Silver Series. Thanks for reading!

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Mapped: Solar Power by Country in 2021

In 2020, solar power saw its largest-ever annual capacity expansion at 127 gigawatts. Here’s a snapshot of solar power capacity by country.

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Solar Power by Country

Mapped: Solar Power by Country in 2021

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

The world is adopting renewable energy at an unprecedented pace, and solar power is the energy source leading the way.

Despite a 4.5% fall in global energy demand in 2020, renewable energy technologies showed promising progress. While the growth in renewables was strong across the board, solar power led from the front with 127 gigawatts installed in 2020, its largest-ever annual capacity expansion.

The above infographic uses data from the International Renewable Energy Agency (IRENA) to map solar power capacity by country in 2021. This includes both solar photovoltaic (PV) and concentrated solar power capacity.

The Solar Power Leaderboard

From the Americas to Oceania, countries in virtually every continent (except Antarctica) added more solar to their mix last year. Here’s a snapshot of solar power capacity by country at the beginning of 2021:

CountryInstalled capacity, megawattsWatts* per capita% of world total
China 🇨🇳 254,35514735.6%
U.S. 🇺🇸 75,57223110.6%
Japan 🇯🇵 67,0004989.4%
Germany 🇩🇪 53,7835937.5%
India 🇮🇳 39,211325.5%
Italy 🇮🇹 21,6003453.0%
Australia 🇦🇺 17,6276372.5%
Vietnam 🇻🇳 16,504602.3%
South Korea 🇰🇷 14,5752172.0%
Spain 🇪🇸 14,0891862.0%
United Kingdom 🇬🇧 13,5632001.9%
France 🇫🇷 11,7331481.6%
Netherlands 🇳🇱 10,2133961.4%
Brazil 🇧🇷 7,881221.1%
Turkey 🇹🇷 6,668730.9%
South Africa 🇿🇦 5,990440.8%
Taiwan 🇹🇼 5,8171720.8%
Belgium 🇧🇪 5,6463940.8%
Mexico 🇲🇽 5,644350.8%
Ukraine 🇺🇦 5,3601140.8%
Poland 🇵🇱 3,936340.6%
Canada 🇨🇦 3,325880.5%
Greece 🇬🇷 3,2472580.5%
Chile 🇨🇱 3,2051420.4%
Switzerland 🇨🇭 3,1182950.4%
Thailand 🇹🇭 2,988430.4%
United Arab Emirates 🇦🇪 2,5391850.4%
Austria 🇦🇹 2,2201780.3%
Czech Republic 🇨🇿 2,0731940.3%
Hungary 🇭🇺 1,9531310.3%
Egypt 🇪🇬 1,694170.2%
Malaysia 🇲🇾 1,493280.2%
Israel 🇮🇱 1,4391340.2%
Russia 🇷🇺 1,42870.2%
Sweden 🇸🇪 1,417630.2%
Romania 🇷🇴 1,387710.2%
Jordan 🇯🇴 1,3591000.2%
Denmark 🇩🇰 1,3001860.2%
Bulgaria 🇧🇬 1,0731520.2%
Philippines 🇵🇭 1,04890.1%
Portugal 🇵🇹 1,025810.1%
Argentina 🇦🇷 764170.1%
Pakistan 🇵🇰 73760.1%
Morocco 🇲🇦 73460.1%
Slovakia 🇸🇰 593870.1%
Honduras 🇭🇳 514530.1%
Algeria 🇩🇿 448100.1%
El Salvador 🇸🇻 429660.1%
Iran 🇮🇷 41450.1%
Saudi Arabia 🇸🇦 409120.1%
Finland 🇫🇮 391390.1%
Dominican Republic 🇩🇴 370340.1%
Peru 🇵🇪 331100.05%
Singapore 🇸🇬 329450.05%
Bangladesh 🇧🇩 30120.04%
Slovenia 🇸🇮 2671280.04%
Uruguay 🇺🇾 256740.04%
Yemen 🇾🇪 25380.04%
Iraq 🇮🇶 21650.03%
Cambodia 🇰🇭 208120.03%
Cyprus 🇨🇾 2001470.03%
Panama 🇵🇦 198460.03%
Luxembourg 🇱🇺 1952440.03%
Malta 🇲🇹 1843120.03%
Indonesia 🇮🇩 17210.02%
Cuba 🇨🇺 163140.02%
Belarus 🇧🇾 159170.02%
Senegal 🇸🇳 15580.02%
Norway 🇳🇴 152170.02%
Lithuania 🇱🇹 148370.02%
Namibia 🇳🇦 145550.02%
New Zealand 🇳🇿 142290.02%
Estonia 🇪🇪 130980.02%
Bolivia 🇧🇴 120100.02%
Oman 🇴🇲 109210.02%
Colombia 🇨🇴 10720.01%
Kenya 🇰🇪 10620.01%
Guatemala 🇬🇹10160.01%
Croatia 🇭🇷 85170.01%
World total 🌎 713,97083100.0%

*1 megawatt = 1,000,000 watts.

China is the undisputed leader in solar installations, with over 35% of global capacity. What’s more, the country is showing no signs of slowing down. It has the world’s largest wind and solar project in the pipeline, which could add another 400,000MW to its clean energy capacity.

Following China from afar is the U.S., which recently surpassed 100,000MW of solar power capacity after installing another 50,000MW in the first three months of 2021. Annual solar growth in the U.S. has averaged an impressive 42% over the last decade. Policies like the solar investment tax credit, which offers a 26% tax credit on residential and commercial solar systems, have helped propel the industry forward.

Although Australia hosts a fraction of China’s solar capacity, it tops the per capita rankings due to its relatively low population of 26 million people. The Australian continent receives the highest amount of solar radiation of any continent, and over 30% of Australian households now have rooftop solar PV systems.

China: The Solar Champion

In 2020, President Xi Jinping stated that China aims to be carbon neutral by 2060, and the country is taking steps to get there.

China is a leader in the solar industry, and it seems to have cracked the code for the entire solar supply chain. In 2019, Chinese firms produced 66% of the world’s polysilicon, the initial building block of silicon-based photovoltaic (PV) panels. Furthermore, more than three-quarters of solar cells came from China, along with 72% of the world’s PV panels.

With that said, it’s no surprise that 5 of the world’s 10 largest solar parks are in China, and it will likely continue to build more as it transitions to carbon neutrality.

What’s Driving the Rush for Solar Power?

The energy transition is a major factor in the rise of renewables, but solar’s growth is partly due to how cheap it has become over time. Solar energy costs have fallen exponentially over the last decade, and it’s now the cheapest source of new energy generation.

Since 2010, the cost of solar power has seen a 85% decrease, down from $0.28 to $0.04 per kWh. According to MIT researchers, economies of scale have been the single-largest factor in continuing the cost decline for the last decade. In other words, as the world installed and made more solar panels, production became cheaper and more efficient.

This year, solar costs are rising due to supply chain issues, but the rise is likely to be temporary as bottlenecks resolve.

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