Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
According to some predictions, silver inventories could be depleted as early as 2025 due to surging industrial demand, which will have far-reaching implications for the silver market, investors, and industries relying on this precious metal. Additionally, the Silver Institute reported in April that the global silver supply gap is expected to widen by 17% this year, driven by robust industrial demand.
Johannes Bernreuter, head of Bernreuter Research, stated that rapid technological advancements and the global transition to renewable energy will drive unprecedented demand for silver. If the current trends continue, the silver market could face significant inventory shortfalls by 2025.
Silver is highly sought after for its excellent conductivity and reflectivity, making it widely used in electronics, photovoltaics (solar panels), and the automotive industry. The demand from high-tech sectors is rising sharply. Among all downstream consumers of silver, the rapid development of photovoltaics and electric vehicles is expected to become the main drivers of silver demand growth. By 2024, global photovoltaic installations are expected to reach 660 GW, intensifying the pressure on silver supplies.
With superior conductivity and corrosion resistance, silver’s military applications are also a key factor in the depletion of inventories. This precious metal is extensively used in advanced defense systems, including weaponry, communication devices, and surveillance equipment. As global defense budgets increase, the military and aerospace sectors are expected to consume more silver.
From the supply side perspective, in the long term, silver production from existing mines is expected to decrease annually. Meanwhile, the exploration of new silver mines is becoming increasingly difficult and costly, with few significant discoveries to replenish the depleting inventories.
According to the Silver Institute, the global silver deficit was about 4,400 tons in 2023. With a recovery in mined silver production, the total global silver supply is expected to increase by 2% to 3% to over 31,700 tons in 2024. However, total silver demand is also expected to grow by 1% to over 36,700 tons, maintaining a supply-demand gap of around 5,000 tons.
It is conceivable that as industrial use continues to deplete silver inventories and the supply-demand gap widens, silver prices could rise rapidly. However, the potential depletion of silver inventories presents both risks and opportunities. Some investors might benefit from rising prices, while others could face increased market uncertainty.
Industries heavily dependent on silver must now prepare for potential supply chain disruptions, including researching alternative materials and investing in recycling technologies. Michael DiRienzo, Executive Director of the Silver Institute, stated that with the explosive growth in industrial demand for silver, the industry must address the impending supply crunch with innovative solutions and sustainable practices.
