Silver Heading to $33 on Clean Energy Tailwinds

• Silver prices rose over 20% in 2024 due to strong investment demand and growing industrial uses.
• Solar energy and electrification are expected to drive significant long-term silver demand
• China set new records for solar capacity growth in 2024, boosting silver's industrial consumption.
• Some analysts predict silver will be the top performing metal in 2025, potentially reaching $33/oz.
• Recent tariff threats and market uncertainty have caused short-term volatility in silver prices.

Silver posted an impressive 20% gain in 2024, outperforming many other asset classes. As a hybrid metal with both monetary and industrial properties, silver is attracting growing interest from investors looking to diversify their portfolios and benefit from strengthening supply-demand fundamentals. In this article, we'll examine the key drivers behind silver's recent rally and explore why many analysts believe the outlook remains bright for this versatile metal.

The Solar Boom Propels Industrial Demand

One of the most compelling reasons to be bullish on silver is its critical role in the rapidly expanding solar energy industry. Silver is an essential component in photovoltaic cells, and while manufacturers are working to reduce silver loadings, substitution remains difficult.

According to Metals Focus, solar panel manufacturing consumed over 6,000 tons of silver in 2023 alone. Looking ahead, the International Energy Agency projects solar power generation could grow at a staggering 16% annual rate through 2027, implying massive upside potential for silver demand.

As Rhona O'Connell and Natalie Scott-Gray of StoneX Financial explain,

"Silver is an integral part of solar cells...the latest generation of PV cells carry a heavier loading than previously. Based on estimates from the International Energy Agency for future power generation, we could be looking at growth rates of 16% per annum through to 2027."

China, the world's largest solar market, exemplifies this rapid growth. The country installed an eye-popping 277 GW of new solar capacity in 2024, lifting its cumulative total to over 1,400 GW. China accounted for about 15% of global solar installations last year.

Investment Demand Remains Robust

In addition to surging industrial offtake, strong investment demand continues to underpin silver prices. Investors purchased nearly 100,000 tons of silver via over-the-counter markets between 2011 and 2024, plus almost 12,000 tons through exchange-traded products.

This trend shows no signs of slowing, especially as inflationary pressures persist and the U.S. dollar potentially peaks. The gold/silver dynamic is an important factor to watch. Historically, when gold rallies decisively,

"Silver investment is expected to remain buoyant and this metal could yet decouple from gold, which is expected to peak this year, while silver marches on. "Silver will move by at least twice as much," note O'Connell and Scott-Gray. "This encourages investors and speculators to gear up on gold positions by taking [silver] - and often doing it first."

New Technologies Add Fuel to the Fire

Beyond established end-markets like solar, silver stands to gain from emerging high-tech applications such as artificial intelligence and transportation electrification. As StoneX writes, silver is "likely to remain loyal to this metal, as the support structure to run AI programs, as well as power-carrying infrastructure."

John Ciampaglia, CEO of Sprott Asset Management, comments:

"We believe silver and its miners have significant investment potential, as silver is both a precious metal and an industrial metal critical to new energy."

Growing use cases in fields ranging from healthcare to automotive manufacturing further bolster the structural bull case for silver.

Of course, no investment is without risk and silver is notoriously volatile. "Knee-jerk reactions" to geopolitical or economic headlines can whipsaw prices in the short run, as evidenced by the recent pullback on U.S. tariff threats.

President-elect Trump's suggestion that imports from key silver producing countries like Mexico and Canada could face duties was "enough to spook the market," causing a short-lived selloff, according to O'Connell and Scott-Gray.

China's solar industry also bears monitoring. The sector is currently grappling with overcapacity issues, and a significant slowdown in domestic installations could temporarily dent silver demand. However, the longer-term trajectory for global solar power growth remains clearly positive.

Benefiting the Silver Tailwind

Dolly Varden Silver

Dolly Varden (TSXV:DV) reported impressive drill results from its flagship Kitsault Valley Project in BC, Canada. A 120m step-out at its Wolf Vein intersected 379 g/t Ag, 0.64% Pb and 0.66% Zn over 21.69m, including 1,804 g/t Ag over 1.67m. This expands the mineralized plunge to over 1,100m. CEO Shawn Khunkhun commented: "At Wolf, we continue to expand the extent of strong mineralization, veining and alteration as we get closer to the Torbrit Silver deposit, located 1,000 meters to the south."

These results demonstrate the exceptional growth potential of the Kitsault Valley project's multiple deposits. Further expansion drilling is planned for Dolly Varden's fully funded 2025 program.

Vizsla Silver Corp.

Vizsla Silver (TSXV:VZLA) delivered a transformative year in 2024, advancing its Panuco silver-gold project in Mexico from exploration to development. Key milestones included a PEA with industry-leading economics, a 45% share price increase, over C$95M raised, and a 43% increase in M&I resources. CEO Michael Konnert stated, "Vizsla Silver went from early-stage exploration to early-stage development. Our focus throughout the year was on derisking known mineralization within the Copala and Napoleon resource areas to maximize potential future economic returns."

For 2025, Vizsla plans to complete a feasibility study, advance the fully permitted/funded Copala test mine, and drill +37,000m for resource expansion and exploration.

Collective Mining

Collective Mining (TSXV:CNL) discovered a new near-surface oxidized silver zone in the northern Apollo area of its Guayabales project in Colombia. Hole APC-100D intersected 75.45m @ 80 g/t AgEq from 22.5m, including 13.0m @ 315 g/t AgEq. Executive Chairman Ari Sussman remarked, "We believe the best is yet to come with aggressive drilling. 2025 is going to be a banner year as the Company pushes the envelope even further with its largest drilling campaign to date."

Collective has four rigs currently operating at Guayabales as part of its 40,000m 2024 program and plans to expand to a 60,000m program in 2025.

Outcrop Silver

Outcrop Silver (TSXV:OCG) reported high-grade results from the La Ye vein at its Santa Ana project in Colombia, extending the vein system 450m along strike and 200m down-dip. Highlight intercepts include 2.41m @ 227 g/t AgEq in hole DH421 and 1.41m @ 457 g/t AgEq in hole DH429, a new discovery. VP Exploration Guillermo Hernandez commented, "The recent results from La Ye highlight its exceptional potential to contribute to mineral resource expansion and together with the discovery of the Lupe vein shows the scalability and continuity of the system." La Ye is a key focus within Outcrop's strategy to expand the maiden resource at Santa Ana through its ongoing drilling campaign.

Silvercorp Metals

Silvercorp ((TSX:SVM) reported strong Q3 Fiscal 2025 operational results, with record revenue of $83.6 million, up 43% year-over-year. The company milled 361,810 tonnes of ore, a 16% increase, and produced 1.9 million ounces of silver, up 16%. Silvercorp's 1,500 tonne per day mill expansion at the Ying Mining District is processing stockpiled ore, further boosting output and generates free cash flow from China mines. With higher metals prices, the 43% revenue growth positions Silvercorp to capitalize on favorable market conditions. The company remains focused on its strategy of free cash flow generation, organic growth through extensive drilling, value-accretive M&A, and a long-term commitment to responsible mining and ESG.

Santacruz Silver Mining

Santacruz Silver (TSXV:SCZ) produced 4.7 million silver equivalent ounces in Q4 2024 from its operations in Bolivia and Mexico, including 1.8 million ounces of silver and 23,357 tonnes of zinc. Executive Chairman Arturo Préstamo stated, "During the fourth quarter of 2024, Santacruz continued to deliver steady operational performance, processing 493,141 tonnes of ore. Silver production rose by 3% compared to the previous quarter, reaching 1,761,686 ounces. This growth in silver output and favorable market dynamics in silver prices have significantly strengthened our revenue-generating ability." He added, "These solid production levels will provide a strong platform for continued value creation as we move into 2025".

Santacruz's diversified asset base and focus on optimizing operations position it to benefit from robust silver prices.

The Investment Thesis for Silver

• Silver offers an attractive way to gain exposure to powerful secular trends in solar energy, electrification, and decarbonization
• The gold/silver ratio is historically elevated, suggesting silver is undervalued relative to gold and likely to outperform
• Prospects for a Fed policy shift could dent the dollar and further support metals prices
• New technology applications from AI to electric vehicles create additional sources of silver demand
• Silver equities provide leverage to rising prices and many miners are generating record free cash flows
• Consider an actively managed silver ETF that holds both bullion and equities for diversified exposure

The bullish case for silver is strengthening as clean energy transitions accelerate and investment demand remains robust. While short-term volatility is likely to persist, the big picture points to a tight physical market and room for prices to run over a multi-year horizon. Investors can play the theme through physical bullion, silver miners, or ETFs offering diversified exposure. Active management may help navigate silver's ups and downs while capturing its attractive upside potential.

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References:

1. O'Connell, Rhona (January 2025). 2025 Annual Metals Outlook
2. Hernandez, Ben (January 2025). ETF Trends. Silver’s ‘Cinderella Story’ Could Continue This Year
3. Invesitng.com (January 2025). Silver Prices Decline Amid Trump’s Tariff Threats and Market Uncertainty