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As the global demand for solar panels soars, so does the demand for silver – a key component in the manufacturing of photovoltaic (PV) panels.
Solar installations are breaking records worldwide in both volume and low price, according to Bloomberg NEF. Installations were up 64% from 2022 to 2023, to 413 gigawatts. Leading the charge is China, which added 240 gigawatts in 2023 alone. Last year photovoltaics consumed 142 million ounces of silver, or 13.8% of total silver usage worldwide, up from nearly 5% in 2014, according to the Silver Institute. The durability and high electrical conductivity of silver make it attractive for many industrial uses, particularly electronics. But in the past 10 years the solar industry’s share of global silver has almost tripled. Not only are solar installations multiplying, but silver use per solar panel is growing, too, by a factor of more than two. More silver content makes solar cells more efficient. Bloomberg estimates that by 2030, solar panels will consume about 20% of total silver demand given trend projections. Despite rising demand from solar, the supply of silver has not risen in recent years. Primary silver mines produce only about 28% of the metal, according to a 2023 report. The other 72% of silver production comes as a by-product of lead, zinc, copper and gold projects. New silver mines are not coming online even though geopolitical disruptions, including the Covid-19 pandemic and the Russia-Ukraine war, have strained the supply chain. Even with the heightened demand for silver, the price today – around $22/oz, USD — is where it was 10 years ago, having traded in a narrow range over that period, between $13.70 and $29.42. Many variables may affect the price, including, among other factors, interest rates, inflation rates, supply forecasts, geopolitical events, and costs of production. Technological innovations may, in the long-term, take some pressure off the silver demand. Supply projections are all based on current PV technology. But what if the technology changes over the next several years? One such technology, based on a mineral called perovskite, could eventually eliminate the need for silver in solar panels. Perovskite solar cell technology, discovered in Japan about 10 years ago, is advancing rapidly. Still, it is unlikely we will see the PV market dramatically switching over from silicon any time soon. Other advances are also underway. Senior scientist Kai Zhu with the National Research Energy Laboratory, and his colleague, Tao Xu, a chemistry professor at Northern Illinois University, have discovered a cheaper and more readily available material. A nickel-doped graphite layer combined with a bismuth-indium alloy layer can be painted onto the perovskite device at mild temperatures and at atmospheric pressure. The new materials may replace silver (or gold) in future solar cells. Technology substitution could help dampen the stress on the global silver supply. It seems, though, that for the near and medium term, silver will remain a crucial component of PVs, and its use, pricing, recycling, and other approaches will need to be employed. Silver demand from solar energy will need to be more carefully integrated into markets, mine and processing investment, and solar pricing. The Blog Tags Widget will appear here on the published site.
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China’s gold Markets under Strain4/17/2024 April has been a busy month for the Hualin International Jewelry Market in Guangzhou. A scrum of eager buyers has descended upon the venue, looking to join a new gold rush as prices soar and the precious metal takes on new life as a vehicle for investment.
Standing out as one of the few bets considered safe in China at present – with stocks, property and banking having lost their lustre in an environment of heightened uncertainty – gold has not only attracted new buyers, but also provided opportunities for the country’s middle class and youth tocash out. The Guangzhou market, originally known for its bustling jade and jewellery trade, has been “flooded” with newly opened gold stores, with dozens emerging according to a store owner earlier this week. “The number of customers is also increasing day by day,” said the owner, who asked not to be identified by name. “Sometimes it feels like a crowded wet market.” Rapid price changes have made for a mercurial scene. “From the beginning of the year until now, there have been customers buying gold bars for tens of thousands, hundreds of thousands of yuan,” he said. “But since the current price is extremely high, consumers are becoming cautious. Most of the new customers are buying products with lower grams.” “Today’s buy-back price is 554 yuan (US$77) per gram,” the merchant said. “Just now, a lady who got married last year sold me the gifts she received at her wedding, including necklaces, pendants and bracelets.” The retail price for gold from major brands, including Chow Tai Fook and Chow Sang Sang, had risen to over 730 yuan per gram as of Friday, a multi-year high. Previous monthly peaks were observed at around 630 yuan per gram in January and 600 yuan per gram in December. The People’s Bank of China, the country’s central bank, bought 160,000 ounces of bullion in March to bring its total reserves to 72.74 million ounces – its 17th consecutive monthly purchase according to official data – as the nation seeks to diversify its holdings away from US bonds amid frayed bilateral ties. China is also intensifying its search for more stockpiles of the valuable substance. China News Service reported on April 7 that a large deposit was discovered in the Qaidam Basin in the north-western province of Qinghai, providing a trove of 43.2 tons valued at over 20 billion yuan (US$2.8 billion). A weekly curated round-up of social, political and economic stories from China and how they impact the world. By submitting, you consent to receiving marketing emails from SCMP. Data from the Ministry of Commerce showed that during this year’s Lunar New Year holiday period sales of gold and silver jewellery – mainly gold – increased by 24 per cent year on year. Gold prices have been hitting historic highs in markets around the world. In New York, the price of gold futures contracts for delivery in June hit an all-time high of US$2,384.5 per ounce on Tuesday. Some owners of gold or its derivatives are following the market closely, prepared to cash out at any moment. “I started buying paper gold at around 300 yuan per gram and have been holding it until now,” said Li Yue, a Guangzhou-based investor. “People started to hoard gold out of concerns over a lack of access to manage their wealth and an excess in money supply.” Paper gold is an instrument for investors who are interested in buying and selling the metal under pre-set contractual terms. It does not involve physical delivery of the metal itself. Wariness over the timing of interest rate cuts by the US Federal Reserve is a factor in the erratic price swings, Li said, and financial regulators have repeatedly warned of price volatilities in the domestic gold market The Blog Tags Widget will appear here on the published site.
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Gold prices are expected to open higher next week, driven by the increasing geopolitical unrest between Iran and Israel. After reaching an all-time high of $2,400 per ounce last week, gold continues to be a primary refuge for investors amid the escalating conflicts in the Middle East. Last week, XAU/USD settled at $2344.235, up 14.075 or +0.60%. The high of the week was $2431.59. Key Points:
Detailed Events Influencing Gold Prices
The direct conflict has intensified following Iran’s launch of a drone attack on Israeli soil, a significant escalation marking the first such direct confrontation. This attack is seen as Iran’s response to what it claims was an Israeli airstrike on its consulate in Damascus earlier this month, which resulted in the deaths of high-ranking officers. The U.S. has reacted by strengthening its stance with Israel, signalling potential further involvement which could escalate tensions. Regional Instability and Its Impacts on Gold The recent drone attacks and ongoing aggressive exchanges have heightened regional instability, compelling investors to turn to gold. The closure of airspace by Israel and neighboring Jordan, in response to the attacks, adds to the regional uncertainty. Such geopolitical developments are historically known to push investors towards the safety of gold, thereby driving up its price. Anticipated Developments and Market Outlook The situation is dynamic, with potential for further escalation. Any new military actions or announcements of retaliatory measures are likely to push gold prices higher as investors seek safety amidst the uncertainty. Market sentiment is currently skewed towards risk aversion, heavily favouring investments in gold due to its safe-haven status. Short-Term Market Forecast Gold prices are likely to continue their volatile trend in the upcoming week, with a strong potential to maintain or even increase their upward momentum. The ongoing and potential future developments between Iran and Israel will be critical in influencing the market, with gold expected to remain a preferred asset for those looking to hedge against geopolitical risk. Overall, the direct conflict between Iran and Israel, coupled with ongoing global economic concerns, ensures that gold remains an attractive investment for those seeking stability in an increasingly volatile world. The Blog Tags Widget will appear here on the published site.
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China’s central bank purchased gold for its reserves for a 17th straight month in March, extending a buying spree that has helped the precious metal surge to a record.
Bullion held by the People’s Bank of China rose 0.2% to 72.74 million troy ounces last month, according to official data released Sunday. It’s the smallest increase in the run of monthly purchases that began in November 2022. The precious metal has been on a tear in the past two months, hitting a procession of records on expectations that lower US interest rates are on the horizon. Central bank buying has also been a significant driver of its strength since 2022. Global central banks, led by China and India, continued adding to their gold reserves in February, marking a ninth straight month of growth, according to the World Gold Council. However, the figure for February showed a 58% decline from the previous month, stemming in part from a higher volume of sales. China’s official reserve assets in March rose to the highest since November 2015. The country’s foreign exchange reserves rose to $3.2457 trillion, the highest since December 2021, as the central bank aims to maintain stable holdings to fend off risks. They rose 0.6% from February and were up 1.9% from a year earlier. Gold’s scorching run to an all-time high may seem easy to explain from a distance, given the fractious geopolitical climate and murky outlook for the global economy. A few weeks ago, when the gold price hit a record high, no one besides a few gold bugs seemed to care. After a long day of berating the Chinese government about overcapacity in their economy, US Treasury Secretary Janet Yellen joined China’s Vice Premier He Lifeng for a boat cruise on the Pearl River on Friday evening in the southern megacity of Guangzhou. The Blog Tags Widget will appear here on the published site.
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