Silver Institute sees strong industrial demand supporting long-term bull market

In a report prepared by Oxford Economics, the Silver Institute raised its industrial consumption forecast, noting that the precious metal will continue to play a critical role in the electrification of the global economy.

“Silver’s superior electrical and thermal conductivity properties are increasingly essential to the technological transformation driving the global economy,” the analysts said. “Sectors such as solar energy (PV), automotive electric vehicles (EVs) and their infrastructure, and data centers and artificial intelligence (AI) will drive industrial demand higher through 2030.”

According to the report, silver demand in the solar sector remains the biggest driver within the industrial segment. Although the amount of silver used in photovoltaic solar panels has been steadily declining in recent years, analysts said the sheer growth in green energy will outweigh further thrifting.

The report noted that in 2014, the solar sector represented about 11% of silver demand; however, a decade later, it now accounts for 29% of demand.

“Although the global trajectory of PV installations remains strong, technological developments have reduced the amount of silver required in some PV cells. The loss of government subsidies and incentives in certain countries, however, is likely to be offset by ambitious targets in others. For example, the European Union aims to deliver at least 700 gigawatts of solar capacity by 2030, which will assist in silver consumption,” the analyst said.

The growing electric vehicle market is the second-largest source of industrial silver consumption. The report forecasts global automotive silver demand to increase at a compound annual growth rate of 3.4% between 2025 and 2031.

“EVs require significantly more silver than traditional internal combustion vehicles (ICEs), with silver used in various applications, including battery management systems, power electronics, charging infrastructure, and electrical contacts. The shift from internal combustion engine vehicles to EVs is expected to boost silver demand significantly; EVs, especially battery-electric vehicles, consume, on average, 67–79% more silver than ICE vehicles, with approximately 25–50 grams of silver per EV,” the report said.

The final source of industrial growth in silver is expected to come from the evolving AI economy, as more data centers are required to support increased computing power.

The report estimates that total global information technology (IT) power capacity increased by approximately 53 times, from 0.93 gigawatts in 2000 to nearly 50 gigawatts in 2025.

“Even in the absence of precise silver-loading data, the link is clear: a 5,252% increase in IT power demand translates into more computing hardware and, consequently, greater demand for silver,” the analysts said. “As AI applications diversify into media production, design, and simulation, demand for servers’ processing power and, by extension, data center infrastructure is expected to continue growing.”

Looking beyond the report, analysts expect industrial demand to keep silver prices well supported in a long-term uptrend. Aside from the solar sector, silver remains a relatively small component in the automotive sector and data center construction, leaving room for prices to move higher before significantly impacting margins.