What is silver and why should investors pay attention?

Silver has become an asset that has attracted increased interest from global investors in recent times. The record-breaking high of its market price has sparked discussions about whether there is an opportunity to achieve better returns than gold. In-depth studies of the silver market will reveal the various factors driving the value of this metal.

How to Invest in Silver: Diverse Options for Thai Investors

Before diving into detailed analysis, it is crucial to understand the available investment channels:

Purchasing Physical Silver: Investors who want to own tangible assets can buy silver bars or coins from reputable dealers in Thailand. The advantage is confidence in actual ownership, but the downsides include high capital requirements, storage and insurance costs, and lower liquidity.

Investing through Funds and Mining Stocks: Mutual funds that invest in global mining companies or directly buying shares of leading silver producers are options with higher liquidity.

Trading via Futures Markets (Futures): The TFEX market offers silver futures contracts with contract multipliers that allow investors to leverage their positions, suitable for experienced investors only.

Trading CFD Contracts: A popular method among retail investors due to low initial capital, high flexibility, and the ability to trade almost continuously.

The History of Silver: From Ancient Currency to Modern Technology

The significance of silver did not start today. Archaeological evidence shows that humans have used this metal as a medium of exchange for over 3,000 years. In the 16th century, when Spain introduced silver coins to the global market, it became a widely accepted currency across continents and remained legal tender in the United States until 1857.

Although its role as an official currency ended in 1935 when many countries abolished the silver standard, the importance of silver did not fade away. Today, this metal has become an indispensable component in the world of technology.

Unique Properties Making Silver a Key Element for the Future

What sets silver apart from gold are its physical properties that cannot be replaced by other metals:

Excellent Conductivity of Electricity and Heat: Making silver essential in manufacturing all types of electronic devices.

Reflectivity: This property enhances the efficiency of solar panels in converting sunlight into electricity.

Antibacterial Properties: Leading to widespread use in medicine, from bandages to surgical instruments and water filtration systems.

Malleability and Ease of Use: Suitable for applications in microelectronics.

These factors are reasons why silver is driven by trends in clean energy development, the expansion of electric vehicles, the creation of 5G networks, and advances in AI technology—all of which rely on silver inevitably.

Factors Driving Silver Prices: Macro and Fundamental Levels

Silver prices do not move randomly but are controlled by numerous forces at multiple levels.

Macroeconomic Factors: Loose monetary policies from central banks, lowering interest rates, lead investors to seek alternative assets. A weakening dollar increases foreign investor demand, and uncertain economic conditions push investors toward safe-haven assets.

Fundamental Factors: Structural deficits (Structural Deficit) are considered the most critical current factor. The World Silver Survey 2025 report by The Silver Institute indicates that the world is consuming more silver than can be produced and recycled combined. This situation has persisted for four consecutive years.

Industrial demand reached an all-time high of 680.5 million ounces in 2024, accounting for 59% of total demand. Meanwhile, supply from production faces structural constraints, and global inventories are decreasing. This imbalance is expected to be a sustainable price driver moving forward.

Silver vs. Gold: Key Comparisons for Investors

Understanding the differences between these two metals will help make informed investment decisions.

Gold/Silver Ratio (GSR) is a tool that assesses relative value, indicating how many ounces of silver are needed to buy one ounce of gold. During the most severe financial crises, such as in 2020, this ratio soared to 124:1, reaching an all-time high. Conversely, in 2011, when market confidence was high, it dropped to 31:1. Currently, the GSR remains above the historical average at around 84:1, suggesting the market has not yet fully reflected silver’s true value from an industrial perspective.

Market Size: The gold market is valued at approximately $30 trillion, while the silver market is only about $2.7 trillion. The smaller market size means that capital inflows can have a more significant impact on silver prices compared to gold.

Volatility: Due to its market size, silver is 2-3 times more volatile than gold. This can be a double-edged sword: silver may suffer larger losses in bear markets but can also surge higher and faster in bull markets.

Asset Role and Characteristics: Gold is considered a safe-haven asset and a reserve asset for central banks. Silver, on the other hand, is a hybrid asset—both a precious metal and an industrial commodity. Central banks do not hold silver as a reserve asset, making its price more closely tied to economic cycles.

Pros and Cons of Investing in Silver

Advantages:

• Potential for significantly higher percentage returns than gold.
• Steady and ongoing industrial demand driven by megatrends in clean energy, electric vehicles, and digital technology.
• Lower per-ounce price makes it more accessible.
• An inflation hedge and a safeguard against currency devaluation.

Disadvantages:

• High volatility can lead to substantial short-term losses.
• Sensitive to economic downturns, as about half of its demand is industrial.
• Physical holdings entail storage and insurance costs.
• No interest or dividend income; returns depend solely on price appreciation.

Conclusion: Silver in the Context of Modern Portfolios

Silver has transcended its image as merely “poor man’s gold” to become a vital asset in the global economy. With strong fundamentals, relentless industrial demand, and a still-high GSR, silver offers opportunities for investors willing to accept risks in exchange for higher potential returns.

The choice of investment method depends on individual goals, experience level, and available capital—whether purchasing physical silver, investing through funds, or trading via derivatives markets. The key is to conduct thorough research, manage risks appropriately, and incorporate experience into decision-making.