Energy Transition Positions Silver for Additional Upside

The transition from fossil fuels to alternative energy sources should position silver for additional upside. For example, certain parts of the globe that harness solar power could fuel demand for the industrial metal.

“Solar has become an important, lower-cost alternative to heavy fuels. It’s very difficult for anyone to say that they can use solar as a base load, but it certainly is quite a good complement to the overall energy mix,” Sprott senior portfolio manager Shree Kargutkar told Kitco News.

A heavier reliance on electricity is also a catalyst for higher silver demand. With big tech companies’ thirst for electricity to power applications like artificial intelligence, machine learning, and cloud computing, silver is poised to benefit due to its electric conductivity properties.

“If we go back five, 10 years ago, the CapEx of most of the companies on the S&P 500 or the NASDAQ was skewed towards technology, but now we are in a paradigm where technology is all the CapEx,” Kargutkar said. “All this points me towards believing that this supply-demand imbalance that we’re seeing is unlikely to be resolved.”

Kargutkar told Kitco that green energy demand is set to rise in emerging market (EM) countries. However, greater demand could also mean countries stockpiling silver to mitigate supply disruptions, which could potentially lead to supply chain imbalances.

“More and more countries are moving from a ‘just in time’ economic model, where everything all across the world was quite fungible and easily transportable and accessible, to a ‘just in case’ type economy that emphasizes domestic stockpiles,” Kargutkar added. “There is a price tag that comes with making sure that a country has enough stockpiles on hand to be able to weather any level of turbulence.”

2 Ways to Silver Exposure

Investors who find the prospects of silver appealing should look at the Sprott Physical Silver Trust (PSLV). The fund invests in unencumbered and fully allocated London good delivery silver bars, and for additional investment flexibility, shareholders can redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions).

Additionally, silver’s demand also increases the need to bolster mining operations. Given this, investors may also want to seek silver mining exposure with the Sprott Silver Miners & Physical Silver ETF (SLVR). The fund tracks the performance of the Nasdaq Sprott Silver Miner Index. The index tracks the performance of the silver miners industry, including silver producers, developers, and explorers, as well as physical silver itself — this makes the fund a more all-encompassing option to capture upside in both physical silver as well as miners.

For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.

The Sprott Physical Silver Trust is generally exposed to multiple risks that have been both identified and described in the Prospectus. Please refer to the Prospectus for a description of these risks. This material must be preceded or accompanied by a prospectus. For an additional copy of the prospectus please visit https://sprott.com/investment-strategies/physical-bullion-trusts/silver/.

An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.

Past performance is no guarantee of future results.  One cannot invest directly in an index.

Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.

Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.

Exchange Traded Funds (ETFs):  SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL
Physical Bullion Funds:PHYS, PSLV, CEF, and SPPP.

Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.

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