Peter Krauth: Silver Market "Extremely Tight," What's Next After US$60?
Summary
Silver Bull Thesis: Guest is strongly bullish on silver after breaking past $50, citing a relentless uptrend, tight market conditions, and potential for $70 in 2026 amid uncharted territory.
Supply Constraints: Silver supply is inelastic with ~75% produced as a byproduct, mine supply peaked in 2016, and new primary projects take 10–15 years, supporting multi-year deficits.
Market Mechanics: October surge tied to a squeeze as inventories drained from London to New York and China hit 10-year lows, with skepticism around CME’s halt; overall tightness persists.
Investment Demand: Physical and ETF demand exceeded expectations, with ETF inflows rising since mid-2024 and total deficits among the largest in a decade, drawing more capital into the metal.
Solar Energy: Despite thrifting and policy shifts, solar installations continue to surprise to the upside and remain a major industrial driver for silver demand.
Energy Storage: Batteries are a game changer as costs are set to halve over five years, enabling solar to provide baseload power with rising adoption alongside solar capacity.
AI and Data Centers: US-centric AI and data centers are boosting electricity demand (data centers +22%, AI +30–31% over a decade), pushing buyers toward solar over nuclear by 5x, indirectly supporting silver.
Portfolio Strategy: Volatility should be used opportunistically; focus on true silver producers (≥40% revenue from silver) and consider higher silver allocation, with research suggesting ~6% in diversified portfolios.
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Peter Croat, editor of Silverto Investor and Silver Adviser. Thank you so much for being here. Great to have you as always. >> Thank you, Charlotte. I'm always uh it's always a pleasure to to chat with you and looking forward to our talk today. >> Me as well. I think we took a little bit of time figuring out when we would do this interview, but ultimately it's coming at really the perfect time with silver getting past 60 for the first time ever this week. So, of course, that's that's where I want to begin. I know that you are bullish on silver heading into 2025, but if I'm remembering correctly, I think 60 is is a little bit beyond where you saw the price going, at least this year. So, let's talk about the move and how we got there. Uh, is it surprising for you? So I mean to some extent yes it is surprising maybe [clears throat] I am a little bit jaded you know having been in this space for so long and expecting frankly you know expecting and and uh not totally surprised of course that silver is moving up by a lot. I mean you know when I uh published my book 3 years ago silver was $20 and I said eventually we're going to see this thing not only take out its all-time high of 50 but then eventually move well well beyond that and that $50 would end up being a new floor. And I think this is where we are right now. Uh we're we're seeing 50 act as a new floor and um and you know silver moving well beyond that. Does it mean it can't move back below 50? I don't think it it means that. I think that's always a possibility. We can't be sure. You know, some sort of uh market pressure of some kind or or major profit taking. It just doesn't seem very or all that likely to me um with the behavior that we've seen of silver and gold all through this summer, spring and summer fall. Um it's been so relentless. I think that's kind of the best word that I have for it. Um, anytime you had some kind of a pullback, weakness, it's as if there was a lot of cash on the sidelines just waiting for this the these minor pullbacks and weakness to step in and just sort of take, you know, these small bites, these small increments at the medals and supporting them really really very strongly. That that's my my sense of what's been going on and how we got here. And you're right. I mean, when we spoke, I think I said that um, you know, we would be looking potentially at about $45 uh, as a high by the end of this year. When we said that, we were probably, if I remember, you know, in the sort of maybe mid to low30s. And so, um, yeah, I mean, I'm, as I say, I myself am quite surprised. I didn't think we'd get here that that fast. I thought 60 was in the cards for next year. Um but here we are, you know, very very I think it speaks very much to um really tightness in the silver market and um well there's two things I think going on. It's it's very much a fundamental story uh tightness in the silver market and then the other part of it is is really um you know an inflation safe haven and that's silver fulfilling its role as as you know a true form of money. We'll definitely get into those silver market dynamics and I like how you sum up the the year as we've seen it so far as that relentless move. Just before we start talking about some of the points that you mentioned, I do I do want to talk about silver's latest rise which seems to have begun around the time we saw that disruption in the comx and we're seeing a lot of of comments among our audience, people wondering if there's a connection there to what's happening with silver. So I wanted to to talk about that just initially and see what your thoughts are on that angle. >> So yeah, I mean this the October surge was a a squeeze because uh the market came to terms with the fact that there wasn't enough silver and that the uh the major above ground existing supply was being drained and that uh London in particular was very low. silver was moving um was moving to other markets like New York because of concerns about tariffs and then um what we saw was that uh um the the the London market eventually got a little bit of relief because we saw silver flowing out of China and then we saw the Chinese market get very low and it's at frankly at 10 10 year lows now in terms of in terms of inventories. So, you know, I was I was speaking to somebody else in a in another interview just a few days ago, and I likened this to a shell game. You know, there there's we don't have more silver to work with. We have this fixed amount of silver. It's just which which market is it in? You know, which shell is it under? Right? So, you're kind of shifting it around, but you're not um you're not helping supply meaningfully. So the market is extremely tight and uh you know I'm typically not so much one for um uh these these um these theories of of um you know uh conspiracies and so on. But you have to admit that, you know, for the CME to to blame uh, you know, the halt of trading on a cooling issue on um the Thanksgiving weekend really does raise a lot of questions and I certainly can't blame people for having their doubts about, you know, the authenticity of the explanation. But, uh, frankly, um, you know, the move in silver, uh, obviously wasn't hurt by that. We've seen it not just support the the the all-time high, but then consistently make new all-time highs. It's just been it's just been uh impressive and and again, relentless. So, um, yeah, it's quite the market. >> Quite quite the market indeed. And you're I think you went in a direction that I was hoping to talk about. this idea that the silver isn't in the places where it's necessarily needed. Is that a dynamic that you see persisting or intensifying in 2026? >> Yes, I do. I mean um you know there are always some things that if we're looking at fundamentals that that could um I guess relieve some of the pressure perhaps on silver demand, but I just can't imagine that it's going to be substantial. Uh there's talk of um in China for example there's been this this sort of uh huge amount of solar panel manufacturing to get ahead of policy changes where there's some of the support for for that um that supply or that production is going away um policy support uh and because of the higher silver price. you've seen a lot of um um manufacturers, you know, up their game when it comes to thrifting so that they would actually, you know, minimize the the amount of silver that they need to put into each solar panel. And yet, you know, if you look back about 10 years, um, every time the International Energy Agency was making forecasts that would go out 5 years in terms of solar panel production and installations, they were they were off by I mean, for 5 years in a row, they were off by 2/3. Installations were three times what they were forecasting. Now, these things obviously can't don't have to necessarily go on forever, but um I I think that it's it's dangerous to underestimate the the the kind of demand we could get from solar. And um you know, an interesting uh thing to to talk about here, Charlotte, is uh you know, and and you can say what you want about how things are uh how AI and data centers and all this demand is is is driving the markets in general, stocks in general. Um but the picks and shovels aspect of that is that you know data centers first of all the the the the line share of data centers are in the US and we know that AI is is very much a US um phenomenon. You know it started there and and that they're they too are are getting the line share of it in terms of you know market reaction and and funds flowing into these stocks. But the picks and shovels part of it is that um data centers I think about 80% of data centers are located in the US first of all and their demand for electricity is expected to grow by 22% over the next decade. AI alone and that is on top of data center demand for electricity is expected to grow by 30 31% over the next decade. So all of these uh demands for electricity are are going to have to be um you know met with supply of electricity. They've gone initially to nuclear. Nuclear is very limited. It's also expensive to build out. Not so much to run after you've built it, but to build it out takes a very long time to um get it uh you know uh uh planned, permitted, built and then finally online. It takes actually 15 years. Solar takes a year and a half. So um there's been a game changer in this sector and that is batteries. Batteries are now uh the cost is falling over the next 5 years is falling by half and um the what we've seen is that in 2025 we're expecting 60% of the solar um panel capacity to be met by batteries. In other words, um we're really catching up with battery to solar so that batteries can support solar and make what I call solar now base load power. Cuz obviously, you know, the sun's shining in the daytime, not at night. So you need, if you're going to generate power with solar, you need to make up for it at night. And the batteries when you store that daytime produced power in the batteries, you can switch to to the batteries at night. And here you have your base load power because it's available you know equally throughout the day. So what we have seen is data centers um uh any sort of um tech and data centers that are in the US that are looking to be carbon neutral have taken up solar to the tune of five times more versus nuclear over the past year. So solar really has been a big supply of of power and is continuing I believe to be a big supply of power to um a lot of industry. Um so I I wouldn't I wouldn't count out solar and and expect too much of a um of of a slowing in terms of uh of installations in terms of solar panel production and so on. That's a dangerous game to play to think that that's going to slow down very much. you can really see how important that industrial side is going to be for silver moving forward. I also wanted to touch on the investment side with you because I think the last time we talked back in June, you were mentioning investment demand for silver this year could be something that outshines what people are expecting. So I I have to imagine that that has played out as we move through the second half of the year. But any any points you would share on that note as well? Yeah. So, um you know we go by what uh the uh typically at least by what the um silver institute expects and um they you know they had forecasted that uh that the the um physical investment would be somewhere around uh I think it was about 150 million ounces for this year. That was revised upwards. I think we're closer to about 200 million ounces. when you add in the um the uh expected investment um sorry the market balance when you add in uh physical coins and bars for this year um we're going to have the the biggest deficit again sorry when you include exchange traded funds not the physical uh when you include exchangeraded funds silver flowing into exchange traded funds we're going to be at the the largest deficit in the last sort of third largest deficit in the last decade. So, um absolutely, you know, we've seen we saw uh silver flowing into ETFs uh bottom around May, June of last year. They've been on a not not a a constant rise, but overall rise. Um so you know people are buying the physical people are buying the ETFs and that's certainly um pushing a lot of of metal into as I say uh you know private holdings physical holdings as well as into the ETFs as they make up for demand and they have to shunt you know that uh that demand into the physical. So um lots of lot I think you know um the the institute I think basically pretty much underestimated what we were going to see in terms of flow this year and if you you know look at the silver price um it certainly has gotten people excited and uh and moving money into the sector >> right so we do we do have this large persistent deficit in silver and I want to look at the supply side a little bit as well to what extent can silver mining companies respond to this this demand and the higher price. We all know that of course mining mine is is hard. It's hard to get a mine off the ground. It's hard to increase production, but any comments you could share there? >> Yeah, absolutely. Um silver in particular is is difficult in terms of trying to get it to to uh to meet demand. It's what we call um silver is um supply inelastic to price in the sense that um even if the price rises like it does now. It's not like you're you know if if you're if you're making iPhones for example and demand goes up significantly you can tell your suppliers to ramp up production and they can do that pretty quickly. Doesn't work that way for silver. um 75% roughly of silver comes from uh mining as a it's a byproduct of mining other metals like gold, copper, lead and zinc. And so um only about 25% of silver comes from what we call primary silver mines. So when these mines or miners um produce silver as a byproduct, so remember 3/4 of silver comes from producing other metals. So if if you're if the silver that you produce is a small portion of your stream of revenues, you're not that motivated uh to try to produce more silver. You're happy to accept a higher price for your silver, [laughter] right? So uh they they essentially don't react to the higher silver price except to accept that higher price. So it actually exacerbates the um it exacerbates the shortage. And what you sometimes have is um when that price is high and and it and it's sustained high, what you might get if some of the miners will say, "Wow, you know, if silver is uh you know, at $50, $60 and I expected to stay there for a while. Gez, why don't I just if I if I have the ability to shift to another part of my deposit? Why don't I start mining a lower grade part of my deposit? um you know produce actually potentially less silver but now at a higher price make the same dollar profit from my mine. So you get these kinds of shifts as well potentially. So that might make things even worse in terms of the amount of silver that comes to market and end up pushing the price potentially even higher. So um you know silver mine supply peaked in 20 um 2016. Uh the silver institute does not see any kind of meaningful growth. It's actually that was about 900 million ounces that year. We're at about 830 million ounces I think uh for this year, next year. Um and you know it takes about 10 to 15 years from the time that you find an economic silver deposit uh get it uh planned, permitted, financed, built and into production, you could easily be at 15 years. So the reaction time is very very slow. Um I think we're going to see these these um these uh shortages and this tightness persist. One last point on that. The silver institute itself uh I think it was in the last silver survey uh report of this year said that they expected that over the next 5 years we would continue to see silver deficits and we would actually probably reach record new high silver deficits. So, it's looking pretty bullish for uh for silver over the next several years uh to come. >> Absolutely. And while we're on the topic of the silver companies, I was hoping we could take a look at how they have been responding to the rise we've seen in the silver price. Maybe we can take a look at which silver companies have have moved so far and where where we might see potential moving on down the line as the silver price perhaps goes higher. >> Sure. So they have, as you can imagine, they've leveraged fantastically um the uh the price in silver. Uh and in fact, even so far, not quite as much as you would have expected because um the silver price has essentially doubled this year, which is phenomenal in a in a single calendar year. The year is not over. Um and the the metals have been up to some extent. I'm going to say 150%, 200%. Normally you get at least a two for one um leverage over the price of silver. We've seen that. We've seen more in some names. We haven't seen it in others. We've seen less in others. But um I mean I I really think that uh you know if if we're in um a sustained uh uh ongoing bull market for silver, we're going to see that leverage across the board in all of the names. And uh we're going to see that uh you know even some of the some of the junk, some of the garbage will actually rise. You know the what they say about rising tide lifts all boats. That's no different in the silver market as well. You're going to have some companies that happen to have name silver in their names or or that um you know maybe have silver in their names produce some silver but maybe that's 15 20% of their output. I don't consider those real silver companies. And so you have to watch for that. You know, I try to aim for companies whose um silver either their their deposit contains somewhere around at least 40% silver or if they're producers that the revenues from silver are at least 40%. And um you know this is this is a uh a very small group of companies. So, um, again, the rising tide can can raise all the names, but I think, you know, you're we're going to see, um, uh, the quality become the cream that rises to the top of of that group of companies and, uh, hopefully we have, uh, we have a lot of those in in our portfolio. >> Well, and that's that's a great point on what actually constitutes a silver company, where is the cutoff. So, thank you for sharing on that point. And of course, as we're looking forward to 2026, we have to take a look at what your expectations for the price are next year. So, of course, we've had this outstanding time in 2025. Is there a particular range that you're looking at for next year, or how are you seeing it? So, I mean, look, at this point, I'm getting I'm having a harder harder and harder time making uh you know, sort of forecast for the silver price uh just because it's been so um so strong and and has surprised me. But what I will say is that um you know, some kind of a consolidation potentially here will not be will not be a surprise. Uh even a little bit of a correction will not be a surprise. It's it's famously volatile. um if we see silver, you know, perhaps back off a little bit from here and into the next the beginning of of uh 2026, I won't be shocked. Um but frankly, you know, to see silver somewhere um below mid40s, high 40s would surprise me. Um sort of anything meaningful below that will surprise me. I think we're going to see some continued strength into next year. Um and and I think relatively conservatively we could potentially see $70 um at some point next year. you know, the moment that you've broken through 50 uh which was this uh historic um event, frankly, because when you look at uh investable assets as a whole, uh silver made what we what we would call a 45 year cup and handle formation. It first reached $50 in 1980. It touched it again in April of 2011 and then it's taken from 1980 until now, it's taken 45 years for it to finally break out through that $50 level. And so we're in uncharted waters, uncharted territory. Um, and this being the kind of market that we're in, um, fundamentally as well as macroeconomically as well as geopolitically, um, I think, uh, odds are silver is going to continue to climb higher and, um, I think it's going to, uh, you know, convert a lot of, uh, doubters into into believers that, um, um, silver is going to go on setting new record highs and, um that it's still relatively early in this market. We're going to see it perform very very well for for several more years. >> Yeah, you know, the price question I think is is a little bit unfair because we are in uncharted territory as you said. So, I do think answering that question as you just did about where we are in the cycle, maybe helps to conceptualize it a little bit better. So, that's a great note for us to wrap up on, unless you had any final thoughts that you would leave silver investors with as we head into 2026. I mean, I I would would say one last point. Um, you know, silver's volatile. We've seen it. It's been fun because the volatility has been to the upside. So, maybe, you know, be cautious that way. Um, don't be surprised if you get some kind of uh rapid draw downs. I do think we're going to continue to see what we saw this year for the most part in terms of there being a lot of cash on the sidelines. you know, a lot of um investors, especially smart money, um and I think that's what we've seen so far. It's been the smart money has been coming off of the sidelines and and ready to kind of bid at these these these small pullbacks um and and start to build the positions that they want to have because they think that they see that this is um this is a secular bull market that it's going to continue to play out. And um that that is I'm going to say pretty much what I would expect. So uh it you know don't let I' I've said this before, I say it in the book, don't let the volatilility be a reason to stay out of this market. Just work make it work for you. Um if you know you're a more conservative investor, I still think having exposure to silver makes sense. it just becomes potentially a a question of the extent or or the the the level to which you're exposed. I I want to say one last thing which which I actually spoke to some some mining students about a couple of weeks back and and I think it was some useful uh a useful insight. Um there was some research done by Oxford uh economics um about two or three years ago and they looked at what kind of exposure to silver would be ideal. So you know there's this in in in in finance there's this thing called uh the uh the efficient frontier in your portfolio and that is when you um you know you you spread your your allocation across different asset classes and if you take stocks, bonds, say cash and precious metals just as some examples commodities and you allocate to these different asset classes you know what they do is they do the research and they say what percentage should you have in each of these asset classes to maximize your returns and min minimize your volatility. And so for a medium risk portfolio, they determined that the exposure should be 6% silver and we're not talking about silver stocks, but silver. Um it was higher for gold, which makes sense, less volatile and so on. But uh when they did this research a couple of years ago, the exposure to silver and it was indirect exposure to silver was.2%. So to go from 2% to 6%, you need to 30x your exposure to get the ideal level of silver in your portfolio. Um Charlotte, I can almost guarantee you pretty much everybody is well below 6%. and perhaps not even you know at 5%. So there's a long way to go and um you know um h having some meaningful exposure to silver should probably do um a lot of good to a lot of portfolios. So I wanted to kind of throw that last bit in there. >> That's a great bit of perspective to end on. I think you're right. I think probably barely anyone is having the exposure to silver that they should. So, thank you so much for for coming on to talk about what's going on in the market and hope to have you back again soon. >> It's been a pleasure as always, Charlotte. Uh, look forward to that. >> Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Peter Crouch. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. >> [music]
Peter Krauth: Silver Market "Extremely Tight," What's Next After US$60?
Summary
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Peter Croat, editor of Silverto Investor and Silver Adviser. Thank you so much for being here. Great to have you as always. >> Thank you, Charlotte. I'm always uh it's always a pleasure to to chat with you and looking forward to our talk today. >> Me as well. I think we took a little bit of time figuring out when we would do this interview, but ultimately it's coming at really the perfect time with silver getting past 60 for the first time ever this week. So, of course, that's that's where I want to begin. I know that you are bullish on silver heading into 2025, but if I'm remembering correctly, I think 60 is is a little bit beyond where you saw the price going, at least this year. So, let's talk about the move and how we got there. Uh, is it surprising for you? So I mean to some extent yes it is surprising maybe [clears throat] I am a little bit jaded you know having been in this space for so long and expecting frankly you know expecting and and uh not totally surprised of course that silver is moving up by a lot. I mean you know when I uh published my book 3 years ago silver was $20 and I said eventually we're going to see this thing not only take out its all-time high of 50 but then eventually move well well beyond that and that $50 would end up being a new floor. And I think this is where we are right now. Uh we're we're seeing 50 act as a new floor and um and you know silver moving well beyond that. Does it mean it can't move back below 50? I don't think it it means that. I think that's always a possibility. We can't be sure. You know, some sort of uh market pressure of some kind or or major profit taking. It just doesn't seem very or all that likely to me um with the behavior that we've seen of silver and gold all through this summer, spring and summer fall. Um it's been so relentless. I think that's kind of the best word that I have for it. Um, anytime you had some kind of a pullback, weakness, it's as if there was a lot of cash on the sidelines just waiting for this the these minor pullbacks and weakness to step in and just sort of take, you know, these small bites, these small increments at the medals and supporting them really really very strongly. That that's my my sense of what's been going on and how we got here. And you're right. I mean, when we spoke, I think I said that um, you know, we would be looking potentially at about $45 uh, as a high by the end of this year. When we said that, we were probably, if I remember, you know, in the sort of maybe mid to low30s. And so, um, yeah, I mean, I'm, as I say, I myself am quite surprised. I didn't think we'd get here that that fast. I thought 60 was in the cards for next year. Um but here we are, you know, very very I think it speaks very much to um really tightness in the silver market and um well there's two things I think going on. It's it's very much a fundamental story uh tightness in the silver market and then the other part of it is is really um you know an inflation safe haven and that's silver fulfilling its role as as you know a true form of money. We'll definitely get into those silver market dynamics and I like how you sum up the the year as we've seen it so far as that relentless move. Just before we start talking about some of the points that you mentioned, I do I do want to talk about silver's latest rise which seems to have begun around the time we saw that disruption in the comx and we're seeing a lot of of comments among our audience, people wondering if there's a connection there to what's happening with silver. So I wanted to to talk about that just initially and see what your thoughts are on that angle. >> So yeah, I mean this the October surge was a a squeeze because uh the market came to terms with the fact that there wasn't enough silver and that the uh the major above ground existing supply was being drained and that uh London in particular was very low. silver was moving um was moving to other markets like New York because of concerns about tariffs and then um what we saw was that uh um the the the London market eventually got a little bit of relief because we saw silver flowing out of China and then we saw the Chinese market get very low and it's at frankly at 10 10 year lows now in terms of in terms of inventories. So, you know, I was I was speaking to somebody else in a in another interview just a few days ago, and I likened this to a shell game. You know, there there's we don't have more silver to work with. We have this fixed amount of silver. It's just which which market is it in? You know, which shell is it under? Right? So, you're kind of shifting it around, but you're not um you're not helping supply meaningfully. So the market is extremely tight and uh you know I'm typically not so much one for um uh these these um these theories of of um you know uh conspiracies and so on. But you have to admit that, you know, for the CME to to blame uh, you know, the halt of trading on a cooling issue on um the Thanksgiving weekend really does raise a lot of questions and I certainly can't blame people for having their doubts about, you know, the authenticity of the explanation. But, uh, frankly, um, you know, the move in silver, uh, obviously wasn't hurt by that. We've seen it not just support the the the all-time high, but then consistently make new all-time highs. It's just been it's just been uh impressive and and again, relentless. So, um, yeah, it's quite the market. >> Quite quite the market indeed. And you're I think you went in a direction that I was hoping to talk about. this idea that the silver isn't in the places where it's necessarily needed. Is that a dynamic that you see persisting or intensifying in 2026? >> Yes, I do. I mean um you know there are always some things that if we're looking at fundamentals that that could um I guess relieve some of the pressure perhaps on silver demand, but I just can't imagine that it's going to be substantial. Uh there's talk of um in China for example there's been this this sort of uh huge amount of solar panel manufacturing to get ahead of policy changes where there's some of the support for for that um that supply or that production is going away um policy support uh and because of the higher silver price. you've seen a lot of um um manufacturers, you know, up their game when it comes to thrifting so that they would actually, you know, minimize the the amount of silver that they need to put into each solar panel. And yet, you know, if you look back about 10 years, um, every time the International Energy Agency was making forecasts that would go out 5 years in terms of solar panel production and installations, they were they were off by I mean, for 5 years in a row, they were off by 2/3. Installations were three times what they were forecasting. Now, these things obviously can't don't have to necessarily go on forever, but um I I think that it's it's dangerous to underestimate the the the kind of demand we could get from solar. And um you know, an interesting uh thing to to talk about here, Charlotte, is uh you know, and and you can say what you want about how things are uh how AI and data centers and all this demand is is is driving the markets in general, stocks in general. Um but the picks and shovels aspect of that is that you know data centers first of all the the the the line share of data centers are in the US and we know that AI is is very much a US um phenomenon. You know it started there and and that they're they too are are getting the line share of it in terms of you know market reaction and and funds flowing into these stocks. But the picks and shovels part of it is that um data centers I think about 80% of data centers are located in the US first of all and their demand for electricity is expected to grow by 22% over the next decade. AI alone and that is on top of data center demand for electricity is expected to grow by 30 31% over the next decade. So all of these uh demands for electricity are are going to have to be um you know met with supply of electricity. They've gone initially to nuclear. Nuclear is very limited. It's also expensive to build out. Not so much to run after you've built it, but to build it out takes a very long time to um get it uh you know uh uh planned, permitted, built and then finally online. It takes actually 15 years. Solar takes a year and a half. So um there's been a game changer in this sector and that is batteries. Batteries are now uh the cost is falling over the next 5 years is falling by half and um the what we've seen is that in 2025 we're expecting 60% of the solar um panel capacity to be met by batteries. In other words, um we're really catching up with battery to solar so that batteries can support solar and make what I call solar now base load power. Cuz obviously, you know, the sun's shining in the daytime, not at night. So you need, if you're going to generate power with solar, you need to make up for it at night. And the batteries when you store that daytime produced power in the batteries, you can switch to to the batteries at night. And here you have your base load power because it's available you know equally throughout the day. So what we have seen is data centers um uh any sort of um tech and data centers that are in the US that are looking to be carbon neutral have taken up solar to the tune of five times more versus nuclear over the past year. So solar really has been a big supply of of power and is continuing I believe to be a big supply of power to um a lot of industry. Um so I I wouldn't I wouldn't count out solar and and expect too much of a um of of a slowing in terms of uh of installations in terms of solar panel production and so on. That's a dangerous game to play to think that that's going to slow down very much. you can really see how important that industrial side is going to be for silver moving forward. I also wanted to touch on the investment side with you because I think the last time we talked back in June, you were mentioning investment demand for silver this year could be something that outshines what people are expecting. So I I have to imagine that that has played out as we move through the second half of the year. But any any points you would share on that note as well? Yeah. So, um you know we go by what uh the uh typically at least by what the um silver institute expects and um they you know they had forecasted that uh that the the um physical investment would be somewhere around uh I think it was about 150 million ounces for this year. That was revised upwards. I think we're closer to about 200 million ounces. when you add in the um the uh expected investment um sorry the market balance when you add in uh physical coins and bars for this year um we're going to have the the biggest deficit again sorry when you include exchange traded funds not the physical uh when you include exchangeraded funds silver flowing into exchange traded funds we're going to be at the the largest deficit in the last sort of third largest deficit in the last decade. So, um absolutely, you know, we've seen we saw uh silver flowing into ETFs uh bottom around May, June of last year. They've been on a not not a a constant rise, but overall rise. Um so you know people are buying the physical people are buying the ETFs and that's certainly um pushing a lot of of metal into as I say uh you know private holdings physical holdings as well as into the ETFs as they make up for demand and they have to shunt you know that uh that demand into the physical. So um lots of lot I think you know um the the institute I think basically pretty much underestimated what we were going to see in terms of flow this year and if you you know look at the silver price um it certainly has gotten people excited and uh and moving money into the sector >> right so we do we do have this large persistent deficit in silver and I want to look at the supply side a little bit as well to what extent can silver mining companies respond to this this demand and the higher price. We all know that of course mining mine is is hard. It's hard to get a mine off the ground. It's hard to increase production, but any comments you could share there? >> Yeah, absolutely. Um silver in particular is is difficult in terms of trying to get it to to uh to meet demand. It's what we call um silver is um supply inelastic to price in the sense that um even if the price rises like it does now. It's not like you're you know if if you're if you're making iPhones for example and demand goes up significantly you can tell your suppliers to ramp up production and they can do that pretty quickly. Doesn't work that way for silver. um 75% roughly of silver comes from uh mining as a it's a byproduct of mining other metals like gold, copper, lead and zinc. And so um only about 25% of silver comes from what we call primary silver mines. So when these mines or miners um produce silver as a byproduct, so remember 3/4 of silver comes from producing other metals. So if if you're if the silver that you produce is a small portion of your stream of revenues, you're not that motivated uh to try to produce more silver. You're happy to accept a higher price for your silver, [laughter] right? So uh they they essentially don't react to the higher silver price except to accept that higher price. So it actually exacerbates the um it exacerbates the shortage. And what you sometimes have is um when that price is high and and it and it's sustained high, what you might get if some of the miners will say, "Wow, you know, if silver is uh you know, at $50, $60 and I expected to stay there for a while. Gez, why don't I just if I if I have the ability to shift to another part of my deposit? Why don't I start mining a lower grade part of my deposit? um you know produce actually potentially less silver but now at a higher price make the same dollar profit from my mine. So you get these kinds of shifts as well potentially. So that might make things even worse in terms of the amount of silver that comes to market and end up pushing the price potentially even higher. So um you know silver mine supply peaked in 20 um 2016. Uh the silver institute does not see any kind of meaningful growth. It's actually that was about 900 million ounces that year. We're at about 830 million ounces I think uh for this year, next year. Um and you know it takes about 10 to 15 years from the time that you find an economic silver deposit uh get it uh planned, permitted, financed, built and into production, you could easily be at 15 years. So the reaction time is very very slow. Um I think we're going to see these these um these uh shortages and this tightness persist. One last point on that. The silver institute itself uh I think it was in the last silver survey uh report of this year said that they expected that over the next 5 years we would continue to see silver deficits and we would actually probably reach record new high silver deficits. So, it's looking pretty bullish for uh for silver over the next several years uh to come. >> Absolutely. And while we're on the topic of the silver companies, I was hoping we could take a look at how they have been responding to the rise we've seen in the silver price. Maybe we can take a look at which silver companies have have moved so far and where where we might see potential moving on down the line as the silver price perhaps goes higher. >> Sure. So they have, as you can imagine, they've leveraged fantastically um the uh the price in silver. Uh and in fact, even so far, not quite as much as you would have expected because um the silver price has essentially doubled this year, which is phenomenal in a in a single calendar year. The year is not over. Um and the the metals have been up to some extent. I'm going to say 150%, 200%. Normally you get at least a two for one um leverage over the price of silver. We've seen that. We've seen more in some names. We haven't seen it in others. We've seen less in others. But um I mean I I really think that uh you know if if we're in um a sustained uh uh ongoing bull market for silver, we're going to see that leverage across the board in all of the names. And uh we're going to see that uh you know even some of the some of the junk, some of the garbage will actually rise. You know the what they say about rising tide lifts all boats. That's no different in the silver market as well. You're going to have some companies that happen to have name silver in their names or or that um you know maybe have silver in their names produce some silver but maybe that's 15 20% of their output. I don't consider those real silver companies. And so you have to watch for that. You know, I try to aim for companies whose um silver either their their deposit contains somewhere around at least 40% silver or if they're producers that the revenues from silver are at least 40%. And um you know this is this is a uh a very small group of companies. So, um, again, the rising tide can can raise all the names, but I think, you know, you're we're going to see, um, uh, the quality become the cream that rises to the top of of that group of companies and, uh, hopefully we have, uh, we have a lot of those in in our portfolio. >> Well, and that's that's a great point on what actually constitutes a silver company, where is the cutoff. So, thank you for sharing on that point. And of course, as we're looking forward to 2026, we have to take a look at what your expectations for the price are next year. So, of course, we've had this outstanding time in 2025. Is there a particular range that you're looking at for next year, or how are you seeing it? So, I mean, look, at this point, I'm getting I'm having a harder harder and harder time making uh you know, sort of forecast for the silver price uh just because it's been so um so strong and and has surprised me. But what I will say is that um you know, some kind of a consolidation potentially here will not be will not be a surprise. Uh even a little bit of a correction will not be a surprise. It's it's famously volatile. um if we see silver, you know, perhaps back off a little bit from here and into the next the beginning of of uh 2026, I won't be shocked. Um but frankly, you know, to see silver somewhere um below mid40s, high 40s would surprise me. Um sort of anything meaningful below that will surprise me. I think we're going to see some continued strength into next year. Um and and I think relatively conservatively we could potentially see $70 um at some point next year. you know, the moment that you've broken through 50 uh which was this uh historic um event, frankly, because when you look at uh investable assets as a whole, uh silver made what we what we would call a 45 year cup and handle formation. It first reached $50 in 1980. It touched it again in April of 2011 and then it's taken from 1980 until now, it's taken 45 years for it to finally break out through that $50 level. And so we're in uncharted waters, uncharted territory. Um, and this being the kind of market that we're in, um, fundamentally as well as macroeconomically as well as geopolitically, um, I think, uh, odds are silver is going to continue to climb higher and, um, I think it's going to, uh, you know, convert a lot of, uh, doubters into into believers that, um, um, silver is going to go on setting new record highs and, um that it's still relatively early in this market. We're going to see it perform very very well for for several more years. >> Yeah, you know, the price question I think is is a little bit unfair because we are in uncharted territory as you said. So, I do think answering that question as you just did about where we are in the cycle, maybe helps to conceptualize it a little bit better. So, that's a great note for us to wrap up on, unless you had any final thoughts that you would leave silver investors with as we head into 2026. I mean, I I would would say one last point. Um, you know, silver's volatile. We've seen it. It's been fun because the volatility has been to the upside. So, maybe, you know, be cautious that way. Um, don't be surprised if you get some kind of uh rapid draw downs. I do think we're going to continue to see what we saw this year for the most part in terms of there being a lot of cash on the sidelines. you know, a lot of um investors, especially smart money, um and I think that's what we've seen so far. It's been the smart money has been coming off of the sidelines and and ready to kind of bid at these these these small pullbacks um and and start to build the positions that they want to have because they think that they see that this is um this is a secular bull market that it's going to continue to play out. And um that that is I'm going to say pretty much what I would expect. So uh it you know don't let I' I've said this before, I say it in the book, don't let the volatilility be a reason to stay out of this market. Just work make it work for you. Um if you know you're a more conservative investor, I still think having exposure to silver makes sense. it just becomes potentially a a question of the extent or or the the the level to which you're exposed. I I want to say one last thing which which I actually spoke to some some mining students about a couple of weeks back and and I think it was some useful uh a useful insight. Um there was some research done by Oxford uh economics um about two or three years ago and they looked at what kind of exposure to silver would be ideal. So you know there's this in in in in finance there's this thing called uh the uh the efficient frontier in your portfolio and that is when you um you know you you spread your your allocation across different asset classes and if you take stocks, bonds, say cash and precious metals just as some examples commodities and you allocate to these different asset classes you know what they do is they do the research and they say what percentage should you have in each of these asset classes to maximize your returns and min minimize your volatility. And so for a medium risk portfolio, they determined that the exposure should be 6% silver and we're not talking about silver stocks, but silver. Um it was higher for gold, which makes sense, less volatile and so on. But uh when they did this research a couple of years ago, the exposure to silver and it was indirect exposure to silver was.2%. So to go from 2% to 6%, you need to 30x your exposure to get the ideal level of silver in your portfolio. Um Charlotte, I can almost guarantee you pretty much everybody is well below 6%. and perhaps not even you know at 5%. So there's a long way to go and um you know um h having some meaningful exposure to silver should probably do um a lot of good to a lot of portfolios. So I wanted to kind of throw that last bit in there. >> That's a great bit of perspective to end on. I think you're right. I think probably barely anyone is having the exposure to silver that they should. So, thank you so much for for coming on to talk about what's going on in the market and hope to have you back again soon. >> It's been a pleasure as always, Charlotte. Uh, look forward to that. >> Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Peter Crouch. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. >> [music]