"The gold of the poor" is no longer cheap!

Author: The Meaning Beyond Surface, Wall Street Journal

In the past, silver was called “the poor man’s gold,” not because it was truly cheap, but because the market never took its scarcity seriously.

Ample supply, adjustable inventories, dispersed uses— for a long time, the market firmly believed: regardless of demand fluctuations, silver could always be quickly replenished. Because of this, it was repeatedly traded as a shadow of gold, yet was almost never seriously allocated.

But this premise has been shattered by reality.

Since 2021, the global silver market has experienced consecutive years of physical supply-demand gaps. Unlike the short-term tensions amplified by financial cycles in the past, this time the gap directly stems from the industrial side: key sectors such as photovoltaics, electrification, and high-end electronics are experiencing rapid demand expansion for silver, while supply struggles to accelerate.

Even more critically, the silver supply system is highly insensitive to price signals.

Over 70% of global silver production comes from by-products of other metals, with output driven by the investment cycles of copper, lead, and zinc, rather than silver prices themselves. This means that even if prices rise, supply cannot quickly increase; when inventories are continuously depleted as buffers, the market faces not just short-term fluctuations but ongoing constraints.

It is at this moment that silver begins to truly shed the narrative of “the poor man’s gold.” It is no longer just a cheap substitute when gold rises, but is transforming into a material that is continuously consumed by key industries and difficult to replace.

( Silver prices approach $100 per ounce. In mid-October last year, silver was only $50/oz, nearly doubling in three months. )

1. The “Identity Dilemma” of Silver: Between Gold and Industrial Metals

To understand why silver has been undervalued for so long, first understand its “identity dilemma.”

In the modern commodity system, assets can roughly be divided into two categories:

One is credit-based assets, with gold as the typical representative. Gold’s value anchor does not come from industrial uses but from the credit system and reserve demand. Even in the weakest demand years, global central banks’ net gold purchases can account for 15%–25% of annual demand, providing a stable price foundation.

The other is growth-oriented assets, such as copper, crude oil, and iron ore. These metals have little financial attribute, and their prices are mainly driven by economic cycles, infrastructure, and manufacturing investments.

Silver, precisely, is caught between these two.

According to the “World Silver Survey 2025,” global silver demand in 2024 totaled 1.164 billion ounces (about 36,200 tons), including:

Industrial demand: 681 million ounces, about 58%;

Jewelry and silverware demand: 263 million ounces, about 23%;

Investment demand (silver bars, coins, ETFs): approximately 191 million ounces, about 16%.

The problem is, these three demand types behave completely differently:

Industrial demand depends on the economic cycle, jewelry demand is highly sensitive to prices, and investment demand is very susceptible to macro sentiment.

This structural split causes silver to lack a stable, singular, dominant pricing anchor over the long term.

The result is reflected in the price: silver has long been forced to depend on gold pricing.

An intuitive indicator is the gold-silver ratio. Over the past half-century, the historical median of the gold-silver ratio has been around 55–60; but between 2018–2020, it once broke through 90, and during the most severe pandemic shocks, even approached 120.

Even with 2024 seeing record-high industrial demand for silver, the gold-silver ratio remains long-term at 80–90, significantly above the long-term average.

This is not because silver is “useless,” but because the market still prices silver using the financial logic of gold.

2. Repositioning Silver: From “Dispersed Uses” to “Industry Lock-in”

The real change is not starting from the financial markets, but quietly occurring on the industrial side.

To summarize the current change in one sentence: silver is shifting from a dispersed industrial metal to a functional material locked into key industries.

1. Photovoltaics: Silver Becomes “Indispensable” for the First Time

Photovoltaics is the most critical link in the structural change of silver demand.

In 2015, global new photovoltaic installations were about 50GW; by 2024, this number has exceeded 400GW, more than an 8-fold increase in less than ten years.

The industry is indeed continuing to “de-silver.” The silver per watt has decreased from about 0.3 grams in early stages to around 0.1 grams under current mainstream technology.

But the expansion rate of installed capacity far exceeds the decline in per-unit usage.

According to the “World Silver Survey 2025,” actual silver demand from the photovoltaic industry in 2024 reached 198 million ounces, more than 1.6 times that of 2019, accounting for about 17% of global silver demand.

More importantly, silver’s role in photovoltaics is not “easily replaceable.” In terms of electrical conductivity, long-term stability, and reliability, silver remains the most comprehensive choice. Technological progress changes the usage but not the position.

This gives silver for the first time a large-scale, fast-growing, price-insensitive demand source.

2. Electric Vehicles and AI Infrastructure: Not Exaggerated in Usage, but Extremely Difficult to Replace

If photovoltaics bring demand scale certainty, then electric vehicles and digital infrastructure bring a change in demand nature.

A traditional fuel vehicle uses about 15–20 grams of silver on average; an electric vehicle typically uses 30–40 grams.

Against the backdrop of limited overall growth in global car sales, the penetration rate of new energy vehicles has risen from less than 3% in 2019 to nearly 20% in 2024, structurally boosting silver demand.

Meanwhile, the demand for silver in data centers, AI servers, and high-end electronics is more about irreplaceability than absolute quantity.

In 2024, silver demand in electrical and electronic fields reached 461 million ounces, setting new records for several consecutive years.

These applications are relatively insensitive to prices but highly sensitive to supply stability.

3. Supply Side Reality: Silver Is Not a Metal That “Can Be Increased by Price”

Contrasting sharply with demand certainty is supply rigidity.

In 2024, global silver mine production was about 820 million ounces, with an annual growth rate of less than 1%.

More importantly, over 70% of global silver production comes from by-products, mainly attached to lead, zinc, copper, and gold mines. This structure has remained virtually unchanged over the past two decades.

Primary silver mine output is only about 228 million ounces, less than 30%, and still in a long-term downward trend.

This means that silver production is not driven by silver prices but by the investment cycles of base metals.

4. From Cyclical Shortages to Structural Tightness

Looking back at history, silver has experienced bull markets before, but most of those were derivatives of financial cycles.

The difference since 2021 is that the silver market has experienced physical supply-demand gaps for consecutive years.

According to the “World Silver Survey 2025,” the global annual supply-demand gap from 2021–2024 is about 150–200 million ounces, with a cumulative shortfall approaching 800 million ounces.

And the visible inventories of silver are not abundant. Currently, global circulating inventories can only cover about 1–1.5 months of consumption, well below the typical 3-month safety line for commodities.

Once large amounts of silver enter photovoltaic modules, electrical equipment, and infrastructure, it becomes very difficult to re-enter the circulation market.

5. Silver Is No Longer Just a Shadow of Gold

Silver has not suddenly become scarce; it is just the first time it meets three conditions simultaneously:

Demand scale is real and sustained Key uses are difficult to replace

Supply growth is highly constrained

These three points have never all appeared together before.

When the market still perceives silver as “gold’s poor cousin,” the industry chain has already begun to re-examine it using the standard of key functional materials.

Silver may still fluctuate, but what is certain is that it is no longer just a shadow of gold.

And this is the most important and most easily underestimated underlying change in this round of market movement.