Silver (Silver): Why are prices surging, and how to choose the right investment?

Last month, the precious metals market experienced a surge, with Silver (Silver Bars) rising again. One of the main factors was the valuation assessment compared to gold, indicating that currently, silver bars might be undervalued. Let’s explore the reasons driving Silver to become an investment opportunity worth paying attention to, and the most suitable methods for Thai investors to enter this market.

Industry Demand vs. Supply Issues: The Real Drivers of Price

The reason we see Silver prices soaring is not random. Data from the latest global precious metals research report clearly shows: the Silver market is facing a severe structural deficit.

In 2024, industrial demand for Silver hit a record high of 680.5 million ounces, while supply from production and recycling is insufficient to meet this demand. This situation has persisted for four consecutive years.

These three industrial factors drive demand:

Solar energy requires massive amounts of silver because it is the best conductor of electricity and heat in nature. Electric vehicles need Silver for various components. 5G networks and AI systems also require Silver in their mining operations.

This is why industry insiders say Silver is not just a traditional precious metal but a “venomous snake’s tail” of future technology.

Why Silver is More Attractive Than Gold Right Now

Gold/Silver Ratio: The Indicator of Truth

The tool used to assess whether Silver is undervalued or overvalued relative to gold is the “Gold/Silver Ratio” or GSR (GSR), which indicates how many ounces of Silver are needed to buy 1 ounce of gold.

Currently, the GSR remains high at around 84:1, leading many investors to believe the market has not yet fairly priced Silver relative to its industrial properties, which have no substitutes.

Silver Market is 10 Times Smaller Than Gold

The Silver market is approximately $2.7 trillion, compared to gold’s $30 trillion. A smaller market means that when capital flows in, the impact on Silver prices can be 2-3 times greater than gold, acting as a double-edged sword for investors.

Macroeconomic Factors Affecting Silver Prices

Monetary Policy and Interest Rates

When interest rates fall, non-yielding assets like Silver become more desirable. A rate cut in 2025 is a key factor expected to push Silver prices higher.

US Dollar Value

Generally, Silver prices move inversely to the dollar. When the dollar weakens, investors holding other currencies can buy Silver at lower prices, boosting demand.

Inflation and Economic Uncertainty

Silver is viewed as an (Inflation Hedge). During uncertain times, investors flock to valuable assets to preserve wealth.

Silver’s History and Role in the New World Era

Silver has a history as currency for over 4,000 years, from ancient barter media to becoming the “world’s first currency” accepted across continents in the 16th century.

Although its official monetary role ended in 1935 when the silver standard was abolished, Silver continues to be produced in bars and coins for investment.

Features that make Silver a key metal of the new era:

• The best conductor of electricity and heat (Better than gold), essential in all electronics
• Highest reflectivity, enhancing solar energy conversion to electricity
• Antibacterial properties, widely used in medical applications
• Flexible and easy to process, suitable for microelectronics

All these qualities explain why Silver is becoming part of the technology shaping our future.

Investment Characteristics: Gold vs. Silver Bars

Key Fact: Central banks hold gold as reserves but not Silver, making Silver prices more linked to economic cycles. Meanwhile, Silver’s growth is driven by industrial demand, which gold lacks.

How Thai Investors Can Invest in Silver

1. Physical Silver Holdings

The traditional method is buying silver bars or coins.

Advantages: Own real assets, no counterparty risk, high privacy.

Disadvantages: High initial investment, wide buy-sell spreads (Premium), storage and insurance costs, low liquidity.

2. Investing via Funds and Mining Stocks

Cost-effective indirect methods.

Mutual Funds: Lower minimum investment, high liquidity, no storage worries.

Mining Stocks: For investors with access to foreign stock markets.

Disadvantages: Company-specific risks, prices may not track global Silver prices accurately.

3. Futures Market

For experienced derivatives traders.

Advantages: Low initial capital (Leverage).

Disadvantages: Very high risk, complex, with expiration dates.

4. CFDs (Contracts for Difference)

Flexible, easy-to-access short- to medium-term trading.

Advantages: Low capital requirement, no physical storage, profit from falling markets, high liquidity.

Disadvantages: High leverage risk, choose reputable brokers.

Opportunities and Risks of Silver Investment

( Opportunities

High Return Potential: High volatility and GSR can lead to higher returns than gold in favorable markets.

Stable Industrial Demand: Transition to clean energy and digital worlds are megatrends supporting Silver demand for years.

Accessible Price: Lower per-ounce price makes it easier for retail investors.

Inflation Hedge: Long history of value preservation.

) Risks to Watch

High Volatility: Can cause significant short-term losses.

Economic Sensitivity: During economic downturns, industrial demand drops, potentially lowering Silver prices.

No Secondary Income: No interest or dividends; returns depend solely on price differences.

Summary: Who Should Consider Silver?

For long-term investors seeking maximum stability, gold remains the standard choice.

But for those willing to accept higher risks for better returns, current factors suggest Silver is an intriguing opportunity: undervalued compared to gold, rising industrial demand, and limited supply.

Key Point: Choose investment methods aligned with your goals, time horizon, and risk appetite—whether physical holdings, funds, or trading contracts.

Silver could be a hidden value in your portfolio. But remember, all investments carry risks. Careful decision-making and thorough research are keys to success.