Silver’s performance over the last 5 years has been anything but stellar, but this should not deter investors as its fundamentals are still very strong. While silver has historically been known as the “poor man’s gold,” there is nothing poor about this metal, and in fact, it has numerous characteristics that make it more desirable.

The Truth About Silver

Silver is an industrial metal, which means it has many applications beyond jewelry. The declining usage of silver in photographic equipment was just one of its many uses, and will not hamper its long term outlook. Silver has antimicrobial properties, which makes it sought after in the medical industry, especially among dentists.

But silver has another, simple advantage that must ultimately push up its price, and this is the fact that consumption of the metal exceeds the output resulting from mining. This has been the case for years, and the only reason we haven’t seen significant price increases already is because the deficit is being met through vendors that have existing silver inventories, but these supplies won’t last forever. Demand for silver is also growing, which ultimately equates to increased value down the road.

Solar Power Will Increase Silver’s Demand

A greater awareness is being made of the benefits of solar energy, and this combined with falling prices means greater demand for silver. The reason for this is because silver is a key component of this technology, being used in the creation of photovoltaic cells. In the year 2000, research estimates that only about 1 million ounces of silver was used in the creation of photovoltaic cells; by 2013 that number increased to fifty million ounces, which is 5% of the worldwide supply of silver. A number of nations, most notably China, are beginning to utilize renewable energy on a significant scale, and this will have a serious impact on silver’s future availability and price.

Silver Consumption Will Continue To Grow

Solar energy and the medical industry are only two areas where silver is high in demand, but there is more, much more. Silver is also sought after for electrical devices, computers and telecommunications equipment. It is also needed in the biotech industry and even textiles. Scientists are continuing to explore the many potential applications of silver, and its capabilities far exceed those of both gold and even platinum. Silver is currently being studied for its ability to eradicate bad odors, fungus, infection and bacteria.

These events in the silver industry happen at a time when mining producers are cutting back operations. This is largely due to the decline in silver prices which has occurred over the last 5 years. With current prices there is simply no reason for silver producers to mine at high capacity, even if the metal’s fundamentals are excellent. This will play into silver’s future value, as the declining production of silver at a time when demand for the metal is increasing will lead to stupendous prices in the future. All in all, silver is a metal that every precious metals investor should have in their portfolio, whether it’s in the form of silver bullions, coins, or more.