Green
Silver Series: Perfect Storm for Silver (Part 2 of 3)
The Silver Series: A Perfect Storm for Silver (Part 2 of 3)
In Part 1 of the Silver Series we showed how precious metals can be a safe haven during times of volatility in a debt-laden era.
Today’s infographic is Part Two of the Silver Series, and it comes to us from Endeavour Silver, outlining some of the key supply and demand indicators that precede a coming gold-silver cycle in which the price of silver could move upwards.
Silver Fundamentals
Silver is produced primarily as a by-product in the mining of non-precious metals, and there is currently a dwindling supply of silver as a result of low base metal prices.
However, silver is more than just a precious metal and a safe haven investment. Its industrial uses also create a significant demand on silver stocks.
As the production of green technologies such as solar cells and EVs quickly escalates, upward pressure is being placed on the price of silver, indicating the potential start of a new gold-silver cycle in the market.
Investment Demand
Just like gold, silver has functioned as a form of money for centuries, and its role as a store of value and hedge against monetary inflation endures.
Currency debasement is not new. Governments throughout history have “printed” money while silver’s value has held more constant over time.
In today’s age, the average investor does not own physical silver. Rather, they invest in financial instruments that track the performance of the physical commodity itself, such as silver exchange-traded funds (ETFs).
Until recently, ETF investment in precious metals has been relatively flat, but there has been a surge in the price of silver. Meanwhile, demand for silver-backed financial products have increased the demand for physical silver and could continue to do so.
Industrial Demand
Silver is also helping to power the green revolution.
The precious metal is the best natural conductor of electricity and heat, and it plays an important role in the production of solar-powered energy. A silver paste is used in photovoltaic solar cells which collects electrons and creates electricity. Silver then helps conduct the electricity out of the cell. Without silver, solar cells would not be as efficient.
As investments and the green revolution demand more and more silver, where is the metal coming from?
A Perfect Storm for Silver: Supply Crunch
The bulk of silver production comes as a by-product of other metal mines, such as zinc, copper, or gold mines.
Since silver is not the primary metal emerging from some of these mines, it faces supply crunches when other metal prices are low.
Silver supply is falling for three reasons:
- Declining mine production due to low base metal prices
- Declining silver mine capacity
- Declining reserves of silver
The demand for silver is rising and the few companies that produce silver could shine.
Don’t miss another part of the Silver Series by connecting with Visual Capitalist.
Green
Ranked: The Most Carbon-Intensive Sectors in the World
Comparing average Scope 1 emission intensities by sector according to an analysis done by S&P Global Inc.
Ranked: The Most Carbon-Intensive Sectors in the World
This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on real assets and resource megatrends each week.
Ever wonder which sectors contribute the most to CO2 emissions around the world?
In this graphic, we explore the answers to that question by comparing average Scope 1 emission intensities by sector, according to an analysis done by S&P Global Inc.
Defining Scope 1 Emissions
Before diving into the data, it may be useful to understand what Scope 1 emissions entail.
Scope 1 emissions are direct greenhouse gas emissions from sources that are owned or controlled by a company, such as their facilities and vehicles.
Source: U.S. Environmental Protection Agency
Scope 1 emissions can do a good job of highlighting a company’s environmental footprint because they represent the direct emissions related to manufacturing or creating a company’s products, whether they are tangible goods, digital software, or services.
Scope 2 and 3 emissions, on the other hand, encompass the indirect emissions associated with a company’s activities, including those from a company’s purchased electricity, leased assets, or investments.
Ranking the Carbon Giants
According to S&P Global’s analysis of 2019-2020 average emissions intensity by sector, utilities is the most carbon-intensive sector in the world, emitting a staggering 2,634 tonnes of CO2 per $1 million of revenue.
Materials and energy sectors follow behind, with 918 tonnes and 571 tonnes of CO2 emitted, respectively.
| Sector | Sector Explanation | Scope 1 CO2 emissions per $1M of revenue, 2019-2020 |
|---|---|---|
| Utilities | Electric, gas, and water utilities and independent producers | 2,634 tonnes |
| Materials | Chemicals, construction materials, packaging, metals, and mining | 918 tonnes |
| Energy | Oil and gas exploration/production and energy equipment | 571 tonnes |
| Industrials | Capital goods, commercial services, and transportation | 194 tonnes |
| Consumer staples | Food, household goods, and personal products | 90 tonnes |
| Consumer discretionary | Automobiles, consumer durables, apparel, and retailing | 33 tonnes |
| Real estate | Real estate and real estate management | 31 tonnes |
| Information technology | Software, technology hardware, and semiconductors | 24 tonnes |
| Financials | Banks, insurance, and diversified financials | 19 tonnes |
| Communication services | Telecommunication, media, and entertainment | 9 tonnes |
| Health care | Health care equipment, pharmaceuticals, biotechnology, and life sciences | 7 tonnes |
S&P Global also reveals some interesting insights when it comes to various industries within the materials sector, including:
- Cement manufacturing exhibits an extremely high level of Scope 1 emissions, emitting more than double the emissions from the utilities sector (5,415 tonnes of CO2 per $1M of revenue)
- Aluminum and steel production are also quite emission-intensive, emitting 1,421 and 1,390 tonnes respectively in 2019-2020
- Relatively lower-emission materials such as gold, glass, metals and paper products bring down the average emissions of the materials sector
Given these trends, a closer look at emission-intensive industries and sectors is necessary for our urgent need to decarbonize the global economy.
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