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1407 2023


The Silver Market: surging demand and tight supply point to a golden trading opportunity

DHF Capital S.A.

Silver, renowned for its high electrical conductivity and durability, has found itself at the forefront of the booming solar industry. As solar capacity installations continue to skyrocket, the demand for silver as an industrial metal is rapidly increasing. In fact, it is expected that China will add almost as much solar capacity as the entire United States this year alone. Looking ahead to 2025, we anticipate that solar-related industrial demand will account for a staggering 53% of the total demand for silver. These developments put significant strain on the already limited supplies, suggesting that the silver market is entering a period of tightness not witnessed in decades. At this very moment, the silver market soars a good 4% where the dollar weakens. Good news for silver traders!

Silver's Growing Importance in the Solar Industry

How did this growth begin? Let's jump into the mathematics for a brief moment. Silver has become scarce and an indispensable component in the solar industry due to its exceptional electrical conductivity and long-lasting properties. Solar panels rely on silver to efficiently convert sunlight into electrical energy, making it a crucial element for the industry's growth. Everyone after all wants a green performing home. As countries around the world ramp up their solar capacity, the demand for silver is surging, creating an unprecedented need for increased supply.

DHF Capital S.A. CEO Bas Kooijman, stated recently in a CNBC interview that silver's 'really undervalued lately'. That was last March. During the last interview with that same CNBC in May, the value of silver increased by roughly 25%. "As we saw a recent silver price of $20.98 last March, the same quantity was worth $25.40 in May. With algorithmic tools and manual trading, we can stay on top of it. Algorithmically we find and exploit the undervaluations where the most rise can be found."

The silver market grows on supply and demand

The market growth is still held with some caution, as other factors are leading. The primary source of silver production is often a by-product of mining operations targeting other metals. As a result, the growth in silver mine production heavily depends on the success of these other metal projects. Furthermore, scrap silver, which contributes nearly 20% of the total supply, is also experiencing a lag in availability. While above-ground inventories remain relatively abundant, they have declined significantly in recent years, adding further strain to the already constrained silver market.

Given the surge in demand from the solar industry and the limited supply sources, the silver market is poised to experience a level of tightness not seen for a very long time. This situation poses a challenge that cannot be easily alleviated by simply increasing silver prices. As industrial demand for silver continues to grow, the pressure on supplies will intensify, potentially leading to a significant supply-demand imbalance in the market. "We are buying monthly and reevaluating monthly," Bas explains. "So we find the monthly trend and buy-in at the best price possible, to later exit the same or next month at a qualifying high".

DHF Capital spots your opportunity for wealth growth

Jump in or jump out? You don't have to make investment decisions alone. Let us help you make them. Outsource your portfolio to secure risk minimization. DHF Capital S.A. works with both algorithms and human experts to predict and act on the market. How that works?

With algorithmic trading, also known as algo trading or automated trading, we use computer algorithms to execute trades based on predefined rules and parameters. In the context of silver trading, algorithms are designed to analyze market data, identify trading opportunities, and automatically execute trades without human intervention, hyperfast. Where the human comes in? Bas: "Understanding the market is up to us, harvesting the data and analyzing that, is up to machines. That is risk minimizing. So humans and computers are working together in a golden mix. We always put a human choice into buying and selling".

At DHF Capital S.A., we specialize in providing tailored investment strategies to seize opportunities in evolving markets. Silver trading is an important part of DHF Capital S.A.'s Alpha and Gamma strategies. Therefore, our team of seasoned professionals can guide you through the complexities of the silver market, helping you make informed decisions to optimize your investments. Don't miss out on the potential rewards of the silver market's current landscape. Contact us today to discuss how DHF Capital S.A. can assist you in navigating this exciting market.

DHF Capital S.A.

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