Advocacy group Understand Solar is projecting the rise of power alternatives like solar energy could send silver prices skyrocketing.
Silver is essential to the solar market, the group said in a blog article posted on its web site on Sunday.
Silver has the highest electrical and thermal conductivity of all metals, while solar energy generation is, by far, the fastest-growing generation source, the U.S.-based group reported.
Silver is used to make silver paste, which conducts electricity out of solar cells. About 20 grams of silver are used in each panel to manufacture silicone solar panels—this kind of panel represents about 85% of the market. (Source: “Why Silver Prices Will Rise: Solar,” Understand Solar, February 14, 2016.)
Silver has rallied 11% so far this year, compared to an 11% drop for the NASDAQ 100 futures. Silver for March delivery was trading at $15.30 on Tuesday.
Understand Solar projects silver prices to soar because solar power in 2000 was a little more than one gigawatt (GW) globally, while in 2015, it was more than 200 GW.
The group noted that the U.S. solar power boom took off and grew 1,600%, thanks to the eight-year extension of the 30% Investment Tax Credit in the U.S., and the quickly dropping solar panel prices from China.
“With the surprise 2nd extension in 2015, this growth will continue,” the group predicted.
Understand Solar said it believes China, the world’s second-largest economy, will be the real market driver; China could be the game-changer due to its plan for very high solar penetration and its proven ability to execute.
The nation’s 12th Five-Year Plan set the stage legislatively and with state bank financing to install 70 GW of solar energy by 2017.
Now China’s 13th Five-Year Plan ramps that up higher for 2020, with a target of 150 GW of solar power.
Earlier this month, an outspoken leader in the precious metals mining industry predicted silver prices could skyrocket to reach $100.00 and above.
Keith Neumeyer, the founder and CEO of First Majestic Silver Corp. (TSE:FR) said the precious metal is “way” more rare than many believe. He said that five centuries ago, people thought the ratio was 16 ounces of silver to one ounce of gold, but now, the silver-to-gold ratio is closer to 10 to one.