Silver (XAG)
The "poor man's gold" with industrial superpowers. Silver is both a precious metal and a critical industrial commodity.
2-Minute Beginner Summary
Silver is unique: it's both a precious metal (like gold) and an industrial metal (like copper). Half of silver demand comes from industry—solar panels, electronics, medical devices. This dual nature makes silver more volatile than gold but with higher upside in bull markets. It typically moves with gold but amplifies the moves.
What Is Silver?
Silver is a precious metal with the highest electrical and thermal conductivity of any element. It's used in jewelry, currency, electronics, solar panels, and medicine.
Why XAG Matters
Silver is critical for green energy (solar panels need 20g each) and electronics. It's also a monetary metal with investment demand from ETFs and coins.
What Moves the Price?
Top 6 drivers affecting Silver prices:
Gold Price
Silver generally follows gold but with more volatility. The gold-silver ratio matters.
Industrial Demand
Solar panels, EVs, and 5G are driving structural demand growth.
Investment Demand
ETF flows and coin sales can swing prices. Retail interest is significant.
Mining Supply
70% of silver is a byproduct of lead, zinc, and copper mining. Supply is inelastic.
Dollar Strength
Like gold, silver is priced in dollars and moves inversely.
Green Energy Transition
Solar PV installations are growing 20%+ annually, each panel needs silver.
Market Structure
Spot vs Futures
London (LBMA) is the spot market. COMEX futures are the most liquid derivatives. Shanghai is growing in importance.
Contango & Backwardation
Silver usually shows mild contango. Can flip to backwardation during supply squeezes (as seen in 2021 retail surge).
Key Exchanges: COMEX (CME Group), LBMA, Shanghai Futures Exchange
Contract Size: 5,000 troy ounces per contract
Seasonality
Silver seasonality mirrors gold with some industrial influences.
Peak Months: January, February, August, September
Low Months: March, June, July
Similar to gold with Indian festival and Chinese New Year demand. Industrial demand is steadier year-round.
Macro Sensitivity
Silver has gold's monetary properties but also industrial exposure. It can rise with economic growth (unlike gold) if industrial demand is strong enough.
- USD Sensitivity: negative
- Inflation Sensitivity: positive
- Growth Sensitivity: mixed
- Rates Sensitivity: negative
Stock & ETF Exposure Map
Related Stocks
- WPM - Wheaton Precious Metals: Major silver streamer
- PAAS - Pan American Silver: Largest primary silver miner
- HL - Hecla Mining: U.S. silver producer
- AG - First Majestic Silver: Pure-play silver miner
- CDE - Coeur Mining: Precious metals miner
- MAG - MAG Silver: Developer with high-grade project
- EXK - Endeavour Silver: Mid-tier producer
- FSM - Fortuna Silver Mines: Latin American producer
Related ETFs
Key Calendar & Reports
Silver Institute Annual Report (Annual)
Source: Silver Institute. Comprehensive supply and demand data
CFTC Commitment of Traders (Weekly)
Source: CFTC. Speculative positioning in silver futures
U.S. Mint Coin Sales (Monthly)
Source: U.S. Mint. American Silver Eagle sales data
How to Trade Silver
ETFs like SLV offer easy access. Mining stocks (SIL) provide leverage. Physical silver (coins, bars) is popular with retail investors.
Frequently Asked Questions
Why is silver more volatile than gold?
Smaller market, more industrial exposure, and retail investor participation. Silver can move 2-3x as much as gold in percentage terms.
What is the gold-silver ratio?
How many ounces of silver buy one ounce of gold. Currently around 80-90. Historically averages 60. Lower ratios favor gold; higher ratios favor silver.
How much silver is used in solar panels?
About 20 grams per panel. With 300+ GW of solar installed annually, this is over 100 million ounces of demand.
Is physical silver taxed differently?
In the U.S., physical silver is taxed as a collectible at 28% long-term capital gains, higher than stocks. ETFs may have different treatment.
What happened with the 2021 silver squeeze?
Reddit retail investors tried to squeeze silver. SLV saw record inflows, but the market is too large to corner. Prices spiked briefly.
Why is 70% of silver a byproduct?
Most silver comes from lead, zinc, and copper mines. Primary silver mines are less common because silver alone doesn't always justify mine economics.
Is silver money?
Historically, yes. "Sterling" originally meant silver. The U.S. used silver coins until 1965. Today it's primarily an industrial/investment metal.
What is silver's industrial future?
Growing demand from solar, EVs, 5G, and medical uses. Silver is irreplaceable in many applications due to its unique conductivity.
Glossary
- Troy Ounce
- Standard unit: 31.1 grams for precious metals.
- Fine Silver
- .999 or higher purity, the standard for bullion.
- Sterling Silver
- 92.5% silver, used in jewelry and flatware.
- Junk Silver
- Pre-1965 U.S. coins with 90% silver content.
- Silver Shot
- Small silver pellets used for industrial applications.
- Photovoltaic
- Solar panel technology that converts sunlight to electricity using silver paste.
- Primary Mine
- A mine where silver is the main product, not a byproduct.
- Streaming
- Financing method where companies buy future silver production at fixed prices.
- Numismatic
- Coins valued for rarity and condition, not just metal content.
- Spot Premium
- Amount physical silver trades above spot price due to fabrication and demand.