Stop thinking of Silver as cheap: Why silver is the gray area of the head and shoulders market

Many investors overlook (Silver) because its price is lower than gold. However, this may be a major misconception today.

In the past, Silver has broken through multiple all-time highs, and global investment experts are beginning to recognize its true potential.

Why is Silver not just a natural white metal?

A history spanning over 4,000 years

Before the era of currency design or digital financial systems, Silver served as a medium of exchange since ancient civilizations.

• Archaeological evidence indicates that Silver was used as currency (in the form of rings and weight-based bars) as early as 3000 BC.
• In the 16th century, Spain imported silver from South America, which became the first transcontinental accepted currency in the world.
• The United States supported Silver as a legal medium of exchange until 1857.
• Although its official role ended after the abolition of the Silver Standard in 1935, Silver’s usage did not stop; it was just beginning.

( Transition into the Industrial Age

The physical properties of Silver are unmatched by any other metal, making it an indispensable component in future technologies.

• Excellent conductor of electricity and heat: Essential for all electronic devices.
• Outstanding reflectivity: Enhances the efficiency of solar panels in converting sunlight into electricity.
• Antibacterial properties: Used in medical applications, from burn wound dressings to surgical instruments and water filtration systems.
• High flexibility: Crucial for microchips and small components in advanced electronics.

These factors drive Silver prices today, whether in the transition to renewable energy, electric vehicle development, 5G networks, or AI infrastructure—all heavily reliant on Silver.

Silver Market: The Imbalance Creating Change

) Major factors influencing price movements

Macroeconomic: Global economic context

• Monetary policies and interest rates: The relationship between interest rate adjustments and asset prices is clear. The rate cuts in 2025 are seen as a key driver pushing Silver prices higher.
• US dollar index: Silver prices often move inversely to the dollar. When the dollar weakens, foreign investors can buy Silver at lower prices, boosting demand and prices.
• Inflation and geopolitical uncertainty: Silver is viewed as an inflation hedge ###Inflation Hedge### and a safe haven during political or economic instability.

Fundamental: Demand-supply dynamics

The World Silver Survey 2025 from The Silver Institute reveals a clear picture: the Silver market is experiencing a “structural deficit” (Structural Deficit). This means global demand exceeds combined production and recycling, a situation ongoing for four years.

• Surging demand: Industrial demand hit a record 680.5 million ounces in 2024, accounting for about 59% of total demand, especially from clean energy, electric vehicles, 5G electronics, and AI data processing.
• Supply lagging behind: While demand skyrockets, suppliers cannot increase production due to structural issues such as mining disruptions, by-products from other mineral extractions, and shrinking inventories.

The combination of strong, inflexible demand and limited, inflexible supply is believed to create a “Perfect Storm” that will push Silver prices to new, historically higher levels.

Gold vs Silver: The unseen comparison

( Gold/Silver Ratio: Relative value indicator

The “Gold/Silver Ratio” or GSR )is a tool measuring how many ounces of Silver are needed to exchange for 1 ounce of gold.

• During the COVID-19 crisis ###March 2020(, amid peak fear, investors flocked to the safest asset—gold—causing the GSR to soar to a record 124:1.
• In 2011, as confidence returned, investors took on more risk and turned to Silver, narrowing the ratio to just 31:1.
• Currently, the ratio remains high at around 84:1, indicating the market has not yet priced Silver appropriately based on industrial fundamentals, revealing a significant opportunity gap.

) Structural differences in market composition

Size and volatility

The gold market is enormous, valued at about $30 trillion, compared to Silver at approximately $2.7 trillion. The smaller market size means that when the same capital flows in, Silver prices tend to move 2-3 times more than gold.

Higher volatility is a double-edged sword: in bear markets, Silver declines more sharply; in bull markets, it rises more rapidly.

Role in the global financial system

Gold holds a position as a reserve asset held by central banks, whereas Silver does not. Instead, Silver acts as a “hybrid” asset—part precious metal, part industrial commodity. Its correlation with economic cycles is stronger than gold, offering growth opportunities driven by industrial demand that gold lacks.

( Investment advice: Who should choose Silver?

For investors seeking maximum stability, gold remains the safe haven. But for those willing to accept higher risk for potentially greater returns, Silver’s current fundamentals—lower prices relative to gold, supply deficits, and growing industrial demand—make it an attractive investment option for growth.

Four pathways for Thai investors interested in bullion

) 1. Physical Silver: The traditional investment method

Purchasing tangible silver, whether in the form of ###Silver Bars### or ###Silver Coins(.

• Where to buy in Thailand: Leading precious metals stores with branches in major commercial districts.
• Advantages: Ownership of real assets, no counterparty risk, high privacy.
• Disadvantages: Requires significant initial capital, hidden costs )storage, insurance(, low liquidity, and risks related to verifying purity.

) 2. Mining stocks and funds: Indirect access

Investing through shares of Silver mining companies or specialized mutual funds.

• Examples: Major global Silver producers like Pan American Silver, Wheaton Precious Metals, Fresnillo.
• Advantages: High liquidity, traded on stock exchanges, no need for physical storage.
• Disadvantages: Company-specific risks such as management issues, production costs, political risks.

( 3. Futures contracts: For professional investors

Trading forward contracts referencing Silver prices via futures markets )TFEX###.

• Examples: TFEX Silver Online Futures, referencing 99.9% purity Silver.
• Advantages: Low initial investment due to high leverage, profit in both rising and falling markets.
• Disadvantages: Very high risk and complexity; suitable only for experienced investors.

4. CFD (Contract for Difference): Highly flexible

Trading Silver for speculative gains from price differences ###often using the symbol XAGUSD(.

• How it works: Entering contracts with brokers to speculate on price changes without owning actual Silver.
• Advantages: Low capital requirement )Leverage(, profit in both directions, high liquidity 24/5, no hidden costs.
• Disadvantages: Leverage risk and counterparty risk )must choose well-regulated brokers(.

Benefits and risks: The facts you need to know

) Opportunities and advantages

1. High return potential: Its high volatility and historically low valuation give Silver a significant chance for percentage gains in a bull market.
2. Growing industrial demand: The mega-trends toward clean energy and digital worlds are irreversible, supporting strong and sustained Silver demand.
3. Lower entry price: Per-ounce prices are dozens of times lower than gold, making it accessible to retail investors.
4. Inflation hedge: Long history of preserving value (Store of Value) relative to fiat currencies.

Risks and disadvantages

1. High price volatility: While offering large gains, it can also cause severe short-term losses.
2. Economic sensitivity: Over half of demand is industrial, making Silver more sensitive to economic downturns than gold.
3. Hidden costs of physical holding: Storage, insurance, and theft risks for physical Silver owners.
4. No income from interest: Returns rely solely on price appreciation (Capital Gain).

Summary: Silver in your investment portfolio

Silver ###Silver( stands at a crossroads between the old world and the new, where its historical role as money still echoes through its importance in modern industry.

Choosing to invest in Silver depends on your goals and risk appetite. But for investors seeking growth opportunities, current fundamentals—low prices, overall deficits, and surging industrial demand—present a compelling case for serious consideration of Silver.