Silver Billed as the Ultimate Critical Mineral
Silver always lags gold but has its time finally come?
The outlook for silver is strong, the Mining Forum Americas 2025 heard this week, as its uses in industrial applications grows.
The silver price finally surpassed the US$40 an ounce threshold in recent weeks, but unlike gold, it is still well below record highs of more than US$50/oz.
“The momentum is now shifting back to real assets, and gold always goes first, then silver follows,” Incrementum managing director, partner and fund manager Ronnie Stöferle told the forum during his Monday morning keynote address.
“Silver, the restless little brother, tends to go wild late in the cycle.”
Wheaton Precious Metals (TSX: WPM) CEO Randy Smallwood described himself as a precious metals bug with a fondness for silver, given the company’s origins as a silver play.
Still, in the June quarter, around 40% of Wheaton’s revenue came from silver.
“In the last three, four, five years, gold has outperformed silver, and it's penalised us a bit in terms of the gold equivalent ounces production and production profiles going forward, but what we've seen over the last six months is silver is starting to wake up,” Smallwood told the forum on Tuesday morning.
“Silver always lags gold. Go back and look at history. Silver has always lagged, and it's more of a retail precious metal.
“It's driven more by retail investment demand, whereas gold tends to start off with institutional and central bank and sovereign wealth-type investments that push that market going forward, so I think that's what's been driving the gold price for the last three, four years, and definitely the last two years, but we are definitely seeing a lot more retail interest in terms of gold, and that bodes well for silver.”
Smallwood noted that silver had outperformed gold over the past six months.
“I’m pretty excited about the commodity. I think the added advantage that silver has is that, in my eyes, silver is the ultimate critical mineral,” he said.
“The more silver we use in all of our mobile devices, in all of our solar power systems and all of our antibacterial water purification systems, the better the world is.
“You've got the highest conductivity, the lowest resistivity of any metal out there, and so I truly do consider silver a mineral that makes the world a better place, and I think that overlying appeal will always drive that.
“We're seeing that in terms of the increased industrial demand, and as we all strive to do more with less, silver is going to be a part of that equation.”
Can demand keep up?
The title of First Majestic Silver Corp’s (TSX: AG) presentation on Tuesday was “There’s no substitute for silver”.
First Majestic vice president, corporate development and investor relations Mani Alkhafaji said more people were paying attention to silver.
Global silver production last year was around 835 million ounces, while annual silver consumption is roughly 1.15 billion ounces.
“It's a supply demand issue,” Alkhafaji said.
“There's really no new supply that's entering the market anytime soon.”
While people cite the gold to silver ratio, Alkhafaji said more people should be paying attention to the mining ratio.
“For every one ounce of gold, we're mining seven ounces of silver,” he said.
In April, the World Silver Survey revealed that global silver demand exceeded supply for a fourth consecutive year in 2024.
The survey, released by the Silver Institute and Metals Focus, expects silver to be in deficit for a fifth consecutive year in 2025.
“The Silver Institute estimates the 2024 deficit to be 150 million ounces,” Alkhafaji said.
“To put that in perspective, you need 10 brand new First Majestics to enter the market right now to bridge this gap, and that's simply not going to happen.
“It took us 22 years to build this this company to what it is right now, and I think more people are starting to pay attention and understand this deficit and the price – it’s not there yet – but it’s slowly trying to catch up to this mismatch.”
Silver is increasingly used in artificial intelligence technology, with demand for chips, servers, switches and robotics expected to contribute to the deficit in coming years.
“As a human race, we consume a lot of silver and we'll continue to consume a lot of silver, whether it's solar panels, whether it's new technologies, AI driven data centres,” Alkhafaji said.
“There's a couple of new mines that are coming online but not enough to bridge this gap that we're facing.”