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The demand for silver continues to outstrip supply, at an ever-increasing rate. The widening gap between the available supply of silver and rapidly growing silver demand are a key reason why precious metals market expert, Andy Schectman, says that buying silver may be the trade of a lifetime.
Silver offers an extremely favorable (favorable for investors, that is) asymmetrical risk/reward ratio. The downside risk appears to be very minimal, against an upside potential that is massive, virtually unlimited.
In this article, I’m going to take a look at demand elements in two major arenas where the demand for silver is increasing fast – electric vehicles (EV) and military demand. And I’ll also look into how the military-industrial complex may be one of the main forces behind the market manipulation (i.e., suppression) of gold and silver prices.
Silver has a long history as a key element being used in battery technology. Technological advancements in the makeup and operation of batteries have only increased the battery industry’s need for silver. One specific application that holds a potentially massive silver demand increase is that of solid-state batteries for use in electric vehicles.
EV industry watchers have their eyes on the new solid-state batteries being developed by Samsung. According to reporting from Kitco, former asset manager and founder of Sprott Resources, Kevin Bambrough, sees explosive potential for silver usage in Samsung’s new EV vehicle batteries.
Samsung is working on producing solid-state batteries that incorporate using silver-carbon (Ag-C) composite anodes. The equation for silver usage in Samsung’s new batteries is as follows:
All right, now let’s broaden our view here to take in the overall potential impact on silver demand. If you assume that Samsung could manage to get its solid-state batteries into about 20% of an approximate 80 million EVs being manufactured annually, that would work out a hefty increase in annual silver demand of around 16,000 metric tons. That figure represents more than half of current total worldwide silver production, which is approximately 25,000 metric tons, according to the Silver Institute. Adding in eventual solid-state battery adoption in large vehicles, ships, and aircraft might boost annual silver demand by another 4,000 to 8,000 metric tons.
Give it a few more years, and a bit more widespread use of solid-state batteries in EVs, and the silver required by the EV industry might eat up nearly all of the annual global mining production of silver. (And this is occurring at the same time that the rapidly growing use of silver in photovoltaic cells used in solar power is also threatening to eventually rise to a point where that demand component alone would outstrip total annual silver production.)
In short, widespread adoption of Samsung’s new batteries would likely have a major impact on the overall supply and demand picture for silver, increasing the shortfall of supply in meeting marketplace needs. Logically, one would expect the net effect of that increase in demand to be higher silver prices.
So, will Samsung’s solid-state batteries be able to capture a substantial slice of market share in the EV sector? Well, their prospects appear to look good. Solid-state batteries offer significant advantages over the lithium-ion batteries currently being used to power electric vehicles. In fact, solid-state batteries check the boxes on every key point of evaluation for EV batteries – driving range, charge time, battery life expectancy, and safety.
That’s an impressive list of advantages that solid-state batteries offer over lithium-ion batteries. And what’s the source of all those advantages? – the very nature of silver. Silver’s unparalleled level of electrical conductivity and stability make for a more efficiently operating battery all across the board, on every point of comparison with lithium-based batteries. The energy density of Samsung’s batteries is about 500 watt-hours (Wh) per kilogram – pretty much double the energy density of the lithium-ion batteries that power most EVs on the road currently.
Unfortunately, the picture for solid-state batteries, at least at their current level of development, isn’t just one of unlimited positives and no negatives. There are a couple of significant obstacles to the widespread adoption of using solid-state batteries in electric vehicles.
One of the current downsides is the matter of cost. Enrico Punsalang, writing for Rideapart.com, put together a report looking at the probable future for solid-state EV batteries. One of the first hurdles to overcome that he notes is the cost factor. He writes that, “At present, it costs way more to manufacture solid-state EV batteries than the lithium-ion and LFP batteries found in current EVs – around three or four times more, to be specific.” He goes on to speculate that, “Perhaps that’s why Toyota plans on introducing solid-state batteries on its Lexus vehicles first, where profit margins are much higher.”
What’s the solution to the cost problem? - Probably just the same solution that appears to solve most high-tech cost issues. That is, as any new technology advances, the cost of it tends to drop dramatically over time. For example, just think of how SSDs in computers, which are standard equipment these days, were initially considered prohibitively expensive.
Another obstacle to wide-scale solid-state battery adoption is the current lack of charging station infrastructure. That touted nine-minute full charge time that solid-state batteries offer is only available if you’ve got some pretty high-end chargers – like those in the 480-600kW range. At present, such charging stations are few and far between. Punsalang notes that even in China, which has relatively more of such high-watt charging stations, you’d need some significant advancements in charging station infrastructure to properly serve EVs powered with solid-state batteries.
Apparently, these obstacles can be overcome with a little time and relative ease. That’s the indication, anyway, from the fact that Samsung and auto manufacturers are moving ahead with solid-state batteries. Even though these new batteries are still in the development stage, Samsung has already inked an agreement with Toyota to start rolling out electric vehicles powered by SS batteries on a mass production level, starting in 2027. As previously noted, solid-state batteries are slated to first be offered in Toyota’s Lexus lineup.
As of this past weekend, this is my new favorite market conspiracy theory – the idea that the military-industrial complex is the power that’s ultimately behind the manipulation (i.e., suppression) of silver prices. (Gold prices, too, but more so silver prices.) Why is this my new favorite conspiracy theory? – Well, it’s because it actually makes pretty good sense if you think about it.
So, what exactly is this conspiracy theory? It’s pretty simple, really. Basically, the military-industrial complex has an ongoing need for massive amounts of silver. Therefore, in order to try to minimize their costs, by keeping the price of silver down, they are at least one of the major unseen forces pushing the bullion banks to artificially suppress silver prices by short selling huge numbers of silver futures contracts.
That such precious metals market manipulation occurs has become pretty obvious to anyone paying attention. The market rolls along, with gold and silver prices advancing steadily higher…then, say, late on a Thursday night (or Monday night, or any other night), when there’s usually very little trading going on, all of a sudden, the major bullion banks start selling silver futures contracts naked short like there’s no tomorrow, able to slam down the price of silver during a time when the market is thinly traded.
The theory has some intriguing little elements to it – like the fact that the United States Bureau of Mines (USBM) being shut down in 1996 pretty well coincides with the timeframe when the US Department of Defense started appearing to publicly give the impression that it really didn’t care very much about silver or its price. Prior to then, for most of the 20th century, the USBM had served as the main US government agency responsible for reporting on the mining, use, and conservation of mineral resources, such as gold and silver.
It's more than a little bit suspicious that the US military would act like it’s not concerned with the price of silver precisely when its need for silver has been exploding. Speaking of exploding, I’ve mentioned here before the “strange-but-true” fun, little trivia tidbit that there are 500 ounces of silver in the nose of every Tomahawk cruise missile.
The military uses large amounts of silver in a wide array of weapons systems, including everything from bullets to missiles. Here are some more fun facts to know and tell your friends:
I didn’t know that. Did you know that?
What else does the military-industrial complex need silver for? – Well, the answer to that question is “just about everything”. Just to name a few of the many, many military applications for silver…
One specific military application that requires a significant amount of silver is that of hypersonic missiles. Hypersonic missiles are all the rage among generals who fantasize about wiping out large numbers of the enemy in minutes. These things are very HYPERsonic – they can zip through the air at a speed nearly 25 times faster than the speed of sound. (That is really, really fast.) And, unlike conventional missiles, hypersonic missiles have the unique ability to change course in mid-flight. What does that mean? – It means that their intended target can be concealed until just mere seconds before impact. And that means that they’re nearly impossible to defend against. In short, these are some really cool missiles to have in your arsenal if you’re commanding an army.
The US annually imports more than 6,000 tons of silver. I think we can pretty safely bet that the military gets the biggest chunk of that (I doubt that it’s mostly going for silverware used at the White House). In fact, silver is possibly the most critical strategic mineral in the world (if it’s not THE most, then it’s, at the very least, certainly one of the most). But what might surprise some people would be learning that the US Department of Energy doesn’t designate silver as being a critical commodity. It also doesn’t think gold is a critical strategic metal…and yet the Federal Reserve Bank has been buying gold hand over fist for the past several years.
6,000 tons of silver is about one fourth of the world’s total annual mining output of silver. Yet, strangely enough, when you look at silver supply and demand reports, military demand does not get its own separate listing. Photovoltaics, used in solar power applications, is a separately listed demand component. So are silverware and photography. Photography accounts for about 2% of total silver demand. But the military’s approximately 25% of total demand doesn’t rate a separate listing. Hmm…..
(Sorry that chart is from 2019 – but it was about the best visual I could find. Probably the most major change since then has been a substantial increase in the demand level of solar/photovoltaics – which now account for about 17% of the overall demand for silver.)
The bottom line on this is that the military-industrial complex needs to acquire – to buy - a BUNCH of silver every year. Simple logic then tells you then that, yes, they have a vested interest in keeping the price of silver as low as possible. Add to that the fact that it appears that they expend some sort of effort in concealing, or at least downplaying, the amount of silver that they have an ongoing need for.
So, could the military-industrial complex possibly be so sneaky and dishonest as to intentionally engage in efforts to manipulate the financial markets in order to suppress the price of silver? – ROFL!!! – Of course they could! In the wise words of Edgar Allan Poe, “Let’s not be naïve here.” (Okay, I don’t know if Poe really said that, but I’m sure someone has. For example, I just did.)
The overall supply and demand situation for silver is already one where total annual demand is significantly greater than annual supply. The demand for silver in the solar power sector alone is growing at an exponential rate. In addition, new uses for silver in electronics and other basic industrial applications, along with an increasing number of healthcare applications, are also increasing the total demand level.
The development of solid-state batteries for use in the EV industry is likely to represent another new and significantly large element of demand for silver. If adoption of solid-state batteries expanded to account for powering just one third of all electric vehicles worldwide, that might represent a level of demand that would, by itself, more than outstrip the current total level of annual silver production.
Now add in the ever-increasing military demand for silver, which is already responsible for absorbing approximately 20-25% of all annual mine production.
And let’s throw in one more fun fact to consider: If you adjusted the price of silver for inflation, then the nominal price would need to increase to approximately $200 per ounce just to be equivalent to the 2011 high price of $50 per ounce. (Yes, inflation has been a bit high lately – and its effects are cumulative.)
If you put all that together, the future for silver looks to be one with virtually unlimited upside potential, against very minimal downside risk. That’s the picture that has led Andy Schectman to describe silver’s investment potential as having an asymmetrical risk/reward ratio that makes buying silver very possibly the trade of a lifetime.
Sources:
https://www.topspeed.com/samsung-600-mile-solid-state-battery/
https://medium.com/@Rubina_/silver-demand-rises-amid-samsungs-ev-battery-innovation-1ecbeeefbfd5
https://nicoyaresearch.com/silver-soar-samsung-silver-solid-state-battery/
https://www.birchgold.com/blog/precious-metals/silver-in-batteries/
https://substack.com/home/post/p-148040799?source=queue
https://www.rideapart.com/news/728316/samsung-ss-ev-battery-coming-soon/
https://www.silverinstitute.org/silver-supply-demand/
https://silverseek.com/article/silver-wars-silver-demand-skyrocketingliterally
https://www.resource-capital.ch/en/news/view/silver-demand-increases-due-to-new-hypersonic-missiles/
https://silverseek.com/article/why-was-us-silver-stockpile-raided-department-defense
https://www.spaceconnectonline.com.au/situational-awareness/6287-northrop-research-to-track-invisible-hypersonic-missiles
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