Silver (Silver): Why it has become an asset that investors should not overlook

In just a few years, silver has risen to become a focal point in the global investment scene. Not only because of its soaring prices but also due to fundamental changes in market dynamics. Today, I will help you understand why silver has the potential to generate higher returns than gold and how Thai investors can craft new portfolios with this asset.

Current Silver Price: A Sign of Change

The current price of silver reflects a clear conflict in the market: unprecedented demand meets inflexible supply. Recent figures from The Silver Institute in the World Silver Survey 2025 indicate that the market is facing a structural supply shortage, a problem ongoing for the past four years.

History of Silver: From Currency to Technological Necessity

Humans have understood the value of silver for over 4,000 years. In ancient times, silver was used as a medium of exchange and a store of wealth:

• Since 3000 BC, companies and individuals used standard-weight silver bars and rings for transactions.
• In the 16th century, Spain imported silver from South America to produce coins, which became a universally accepted currency and remained legal tender in the US until 1857.
• Although the silver standard was abandoned in 1935, the production of investment coins and bars continued.

However, the role of silver has dramatically changed. Today, silver is not only a risk hedge asset but also a key component in technological development.

Unique Properties: Why Silver Dominates Future Technology

What sets silver apart from other precious metals are its unmatched physical properties:

Superior thermal and electrical conductivity: Silver is the best conductor, making it indispensable in electronic devices from smartphones to connected sensors.

Reflectivity: Its ability to reflect light best among metals makes it vital in solar panels for converting sunlight into electricity.

Antimicrobial properties: Silver’s antibacterial qualities have led to medical applications, from specialized bandages to surgical instruments and water filtration systems.

Flexibility and applicability: These characteristics make silver ideal for creating micro-components in microelectronics.

All these factors drive demand for silver, whether in the transition to clean energy, expansion of electric vehicles, 5G networks, or smart infrastructure.

Market Drivers: What Moves Silver Prices

Silver prices are highly unpredictable and influenced by multiple factors at various levels.

Macroeconomic Conditions: The Main Drivers

Monetary policies and interest rates: The US Federal Reserve’s interest rate cuts in 2025 sent clear signals to the market. Investors shifted allocations into higher-yield assets, with silver being an attractive option.

US dollar strength: There is a clear inverse relationship. When the dollar weakens, investors from other countries can buy silver at lower prices, increasing demand and pushing prices higher.

Inflation and geopolitical uncertainty: Silver, like gold, is an inflation hedge. During times of currency devaluation fears or geopolitical instability, investors tend to seek assets with real value.

Supply-Demand Equation: The Core of Analysis

The World Silver Survey 2025 reveals a severe issue: a structural shortage.

Demand side: Industrial demand hit an all-time high of 680.5 million ounces in 2024, accounting for nearly 59% of total demand, especially in clean energy, electric vehicles, and digital connectivity.

Supply side: Production remains stagnant due to structural constraints, secondary output from other mineral mines, and declining stockpiles. These cannot meet soaring demand.

This situation is not just speculation but a market reality described by analysts as a “perfect storm” that could significantly elevate prices in the future.

Comparison: Gold vs. Silver – What Investors Need to Know

Gold and silver are often viewed as similar assets, but the reality is much more complex.

Gold/Silver Ratio (GSR): A Valuation Tool

The GSR tells us how many ounces of silver are needed to buy one ounce of gold. This figure is quite meaningful:

• During extreme panic, such as the COVID-19 pandemic in March 2020, the ratio soared to 124:1, a record high, as investors fled to the most liquid and safe assets.
• Conversely, as confidence returns, investors are willing to take risks for higher returns, and the GSR drops to around 31:1 in 2011.
• Currently, the GSR is about 84:1, above the long-term average, indicating the market has not fully priced in the fundamental factors of silver.

( Market Size and Volatility

The gold market is much larger, approximately $30 trillion, compared to the silver market at around $2.7 trillion.

A smaller market size implies two key points:

1. Impact of capital flows: When funds enter the market, silver prices tend to move more sharply than gold.
2. Volatility: Silver is 2-3 times more volatile than gold, offering both opportunities and risks.

) Different Roles in Portfolios

Gold acts as a safe haven and central bank reserve asset. Silver is a “hybrid”—more than a precious metal, but also heavily linked to industrial cycles.

This difference makes silver more correlated with economic cycles but also offers growth potential from expanding industrial uses that gold lacks.

Silver Investment Pathways: Options for Modern Investors

Investors have various ways to access this opportunity, each with unique characteristics.

Physical Silver: Ownership of Real Assets

Buy silver bars or coins for tangible ownership:

• Where to buy: Major dealers in Thailand include Ausiris, MTS Gold, Bowins Silver, SNP Gold.
• Advantages: Actual ownership, no counterparty risk, high privacy.
• Disadvantages: High capital requirement, wide bid-ask spreads, storage and insurance costs, low liquidity.

Funds and Producer Stocks: Indirect, Liquid Investment

Funds: Thai asset management companies offer funds investing in silver mining stocks, such as DAOL-SILVER linked to the Global X Silver Miners ETF.

Producer Stocks: Major silver producers like Pan American Silver, Wheaton Precious Metals, Fresnillo, Hecla Mining.

• Advantages: High liquidity, easy trading on stock exchanges, no need for physical storage.
• Disadvantages: Company-specific risks, management, production costs, geopolitical risks, which may not correlate directly with silver prices.

Futures Contracts: Tools for Advanced Analysis

TFEX Silver Online Futures: Contracts referencing 99.9% pure silver on global markets.

• Advantages: Low initial capital ###Leverage###, profit in both directions.
• Disadvantages: Very high risk, suitable only for experienced investors, with expiration dates.

( CFD Contracts: Flexible for Speculators

CFD )Contract for Difference### allows investors to speculate on price differences with brokers, often using symbols like XAGUSD(:

• Low capital requirement: Leverage enables larger positions.
• High flexibility: Buy or sell depending on market outlook.
• High liquidity: Easy to open and close positions quickly.
• No hidden costs: No storage, insurance, or inspection fees.
• Disadvantages: Leverage risk, counterparty risk, requires choosing reputable brokers.

Investment Method Comparison: Summary Table

Potential and Risks: A Balanced Overview

) Opportunities

1. Higher returns: Increased volatility and lower historical valuation compared to gold create potential for outsized gains.
2. Sustainable demand: The megatrends in clean energy, digital, and AI will continue to drive demand for years.
3. Easy access: Lower per-ounce price than gold makes it accessible to retail investors.
4. Inflation hedge: Long history of preserving value.

( Risks

1. High volatility: High returns can turn into losses just as quickly.
2. Economic sensitivity: Half of demand is industrial; economic slowdown could depress prices.
3. Storage costs: Physical forms entail costs and risks.
4. No interest income: Returns only from price differentials.

Conclusion: Silver in Modern Portfolios

Silver has evolved beyond being the “poor man’s gold” into a dual-asset: risk hedge and growth driver.

While gold remains the standard for stability, those willing to accept higher risk for better returns should consider the current fundamentals—low prices, inflexible supply, and growing industrial demand—as compelling reasons to view silver as an attractive growth investment today.

The key is selecting the investment method aligned with your goals, risk tolerance, and liquidity needs—whether holding physical, trading funds, or derivatives. Understanding that the silver market is entering a new chapter is crucial; missing this insight could mean missing out on significant opportunities.