Silver shines brighter than gold as EV demand picks up - Guardian Vaults
(Kitco News) - Silver prices, while holding support above $24 an ounce, are struggling to attract consistent bullish momentum. However, one analyst said that the market shouldn't be discounted as silver represents the metal of the future.
In a report published Tuesday, John Feeney, business development manager at Guardian Vaults, said that despite the current lackluster performance, silver should attract new investor attention as it becomes clear that the Federal Reserve will not be able to shift its monetary policies anytime soon, especially after the disappointing August employment numbers.
"One day, eventually, markets should wake up to the fact that the Fed cannot tighten monetary policy and normalize interested rates without severely negative consequences. The debt burden of governments, corporates and individuals rely on ultra-low interest rates without causing a bust. Fed chair members, however, do like to talk about tightening a lot, though, pretending that they have an end-game or an exit strategy, which they don't. The world is addicted to cheap debt and free money, so it's hard to take that away easily," Feeney said in his latest report.
While global monetary policies support the precious metals, Feeney said that silver's industrial demand makes it a leader.
Photovoltaic solar power has been an essential pillar of demand for silver; however, Feeney said that the electric vehicle market represents a critical growth sector for the grey metal.
"Silver shouldn't be seen as a 'barbarous relic', but a metal for the future, as its industrial application is only growing with greater renewable energy adoption and the rise of electric vehicles," he said. "Silver has a monetary history that remains today. Investors also flock to the metal in a safe haven rush at times, so the price does benefit greatly from an increase in 'monetary'demand. But the real driver we see for future demand sits with its immense industrial applications and the new growth sector of electric vehicles."
Quoting data from the World Silver Institute, Feeney said that silver usage in electric vehicles is expected to grow to 90 million ounces by 2025. The demand is projected to grow to more than 100,000 ounces by 2030.
"This is a big deal, as given the silver supply outlook remains incredibly stable, we could easily see a very decent deficit in the silver market in the years to come, thanks to electric vehicle adoption," he said.
Instead of focusing on silver's short-term volatility, he said that investors should focus on the precious metal's long-term bullish fundamentals.
"Sharp price drops should be seen as opportunities, as the price itself does not signal a change in the long-term fundamentals.," he said. "Silver is a unique metal that is not easily replaced by an alternative when electrical efficiency in the number one goal. Investors should feel confident in the longer-term tailwinds that benefit the silver market, as these are in our opinion, even much stronger than those benefiting gold."