Silver is set to be a beneficiary of the electric car revolution, analysts say.
The largest driver of silver consumption will be industrial uses such as batteries, electronics and solar energy, according to Canadian investment firm Sprott.
“Lithium and cobalt, two key battery metals, are currently in the spotlight, but investors should also understand that silver has a critical role to play in the shift to electric vehicles (EVs) and the growing demand for fossil-free forms of energy generation to support electrification,” senior portfolio manager Maria Smirnova said.
The International Energy Agency estimates that the number of electric cars on the road will reach at least 125 million – but could be as high as 220 million – by 2030.
By comparison, just 3 million electric cars were on the road at the end of 2017.
“As the technology boom fuels a dramatic shift in the vehicles we drive, the trends could give silver a turbocharge,” Ms Smirnova said.
>> Scroll down for a list of ASX stocks with exposure to silver, courtesy of leading ASX data provider MakCorp
“In fact, last year the auto sector’s demand for silver grew 5 per cent, while silver demand in photovoltaics increased 19 per cent.”
Silver has high electrical conductivity, making it useful for conductors and electrodes.
As self-driving vehicles start to become a reality, silver will also have a role to play.
The precious metal – which is produced as a by-product of copper, gold, lead, and zinc refining – is a component in technology such as collision avoidance systems.
“China estimates that self-driving vehicles will account for about 10 per cent of all cars on the road by 2030,” Ms Smirnova said.
The increasing push for green energy alternatives will also drive demand for silver.
Silver, in the form of silver paste – which contains about 90 per cent silver powder — is also necessary to make solar panels.
Intelligent highway to drive silver demand
Besides your typical solar panels on rooftops, a quirkier use of the technology is being rolled out across China.
A new 1080m solar-powered road is being built in Jinan in eastern China. According to Bloomberg, the solar-panel paved highway will generate enough electricity to power the road’s lights and 800 homes.
Part of China’s vision with this project is also to provide “on-the-go” recharging of electric vehicle batteries.
In the past 18 months, the price of silver has traded between $US16 ($21) and $US18 an ounce – a far cry from the multi-decade peak of $50 per ounce the precious metal reached in April 2011.
“Although silver climbed nearly 15 per cent in 2016 and gained 6.4 per cent in 2017, it underperformed gold which rose 8.6 per cent in 2016 and 13.1 per cent in 2017,” Ms Smirnova noted.
But she is optimistic on where the price of silver will go, predicting that it can return to its multi-year base of $US21.
Pure-play silver companies listed on the ASX are a rare breed.
While Australia is a big silver producer, the commodity is typically tied up with base metals, principally lead and zinc.
This means there is nearly 190 ASX-listed companies with exposure to silver.
Here’s a list of ASX stocks with exposure to silver courtesy of leading ASX data provider MakCorp. (Scroll or swipe for full table)
Silver Mines (ASX:SVL) is a pure play silver explorer, but in terms of share price growth it certainly isn’t seeing the investor love.
Over the past year its share price has slipped over 64 per cent.
Silver Mines’ primary focus is it Bowdens silver project in New South Wales, where it recently defined a maiden reserve of 66.3 million ounces of silver, 130,800 tonnes of zinc and 95,300 tonnes of lead.
Brisbane-based Metals479 is another pure-play silver company, but it has temporarily delayed its plans to list on the ASX while it mulls over a potentially hot project buy.
The Nevada-focused silver play which counts Canadian billionaire investor Eric Sprott as its biggest shareholder — previously launched a $7 million initial public offer in March with the aim of listing in May.
Adriatic Metals (ASX:ADT), which only just landed on the ASX in May and is primarily focused on lead and zinc exploration, impressed investors yesterday with high grades of gold, silver and zinc following initial drilling at its Vares project in Bosnia & Herzegovina.
The company’s share price is up 35 per cent since it lit up the boards at the start of last month.
Drilling delivered a “combination of highest grade and thickest intercept to-date” including 64 metres at 4.6 grams of gold per tonne, 537g/t of silver and 10.8% of zinc.
CEO Geraint Harris said the “exciting” results were “some of the highest grade polymetallic results on the ASX” and “had the potential to add significant tonnes to any future resource”.
Multi-commodity player King River Copper (ASX:KRC) has notched up some big gains in the past year, with a 1740 per cent increase in its share price.
More recently the company has been focused on vanadium, but it also has a gold, silver and copper gold project in Western Australia.
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This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.