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Silver Market forecast - increasing solar panel demand drives silver speculation

Investors usually look at gold when markets go south and very few look at silver’s potential. However that might be a mistake given the need for silver in photovoltaic plates and burgeoning demand argues Rebecca Jones.

US Today recently argued that silver might make it a better investment than its precious metal cousin in the next few years, with the anticipated rise in demand for solar panels driving demand: 

Silver in Silicon Panels

Silver is used in the creation of photovoltaic panels. Silver is a unique metal. It has the highest electrical and thermal conductivity of all metals, and it's the most reflective. These physical properties make it a highly valued industrial metal, especially when used in solar cells. Silver is actually a primary ingredient in photovoltaic cells, and 90% of crystalline silicon photovoltaic cells, which are the most common solar cell, use a silver paste.

Silver in Silicon Cells

When sunlight hits the silicon cell it generates electrons. The silver used in the cell works as a conductor to collect these electrons in order to form a useful electric current. The silver then transports the electricity out of the cell so it can be used. Further, the conductive nature of silver enhances the reflection of the sunlight to improve the energy that's collected. Therefore, if it wasn't for silver solar wouldn't be as efficient in turning sunlight into energy.

The average solar panel actually uses about two-thirds of an ounce of silver, which is about 20 grams according to Casey Research That might not sound like a lot, but at around $16 an ounce it contributes more to the cost of solar than it does to the other industrial products that use silver.

A typical laptop only contains 750 milligrams to 1.25 grams of silver while a cell phone contains just 200-300 milligrams of silver, so silver is a tiny fraction of the cost of those devices. 


Overall, the solar industry uses about 5% of the world's annual silver supply, or an estimated 52.4 million ounces. However, as demand for solar increases, especially in China, the demand for silver used in solar could double. Solar panel uses take up about 5 percent of annual silver supply, estimated ETF Securities research director Mike McGlone. Last year the Chinese government also mandated an increase in domestic solar capacity to 25 gigawatts by 2015, a further drive to demand, he added. A gigawatt is enough to power between 750,000 and 1,000,000 U.S. homes.

Because of this it is estimated that by next year the solar industry will use 100 million ounces of silver. Because of the volatility in the price of solar, panel makers are working on using less of it on each panel. Still, the overall increase in demand for new solar panels is what's driving the demand silver used by the solar industry. 

This increased demand for silver could have a real impact on the solar marketplace in the years to come as solar could push up the price of silver. So, should silver prices surge it could have an impact on the production costs of solar panels, which would then impact the economics of the solar industry.

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