Many years ago, when they first came out with those Chinese-made, two-wheeled hoverboards, some smart guy bought a couple for the office. And it was great. We did laps around the desks. The interns jousted with bike helmets, mops and trashcan lids…
Well, one day after I rocked a triple-digit trade I was doing donuts on the thing and it started smoking. I hopped off and we watched as orange flames licked out of the motor and the smell of burning plastic filled the air.
Being on the 11th floor, the last thing we wanted was to start the sprinklers so someone opened the door to the fire escape and we kicked it out onto the metal landing where it burnt itself out.
Instead of giving us some sort of award for saving countless lives, a score of businesses and the building landlord sent us a rash of threatening legal papers and banned hoverboards from the office tower henceforth – as you might expect.
The Evolution of Solid State
About two weeks ago Samsung announced that it had developed a solid state battery. They touted it as a revolution in EVs and batteries. And, if it is true, it will be an invention that solves a lot of problems.
Samsung claims that an EV with its new battery will have a range of 600 miles (965km) and will charge in just 9 minutes. Furthermore, this battery will have a lifespan of 20 years instead of 5-10 like the current lithium-ion batteries.
And since it is a solid state instead of liquid it won’t bust into flames if you crash.
But here is the thing that gets silver investors excited. The new Samsung battery requires 32.151 ounces of silver. Today silver is priced at $29.90 an ounce so you are looking at roughly $1000 in silver per car, which doesn’t seem that unreasonable for a battery with twice the lifespan.
Car production is about 80 million a year. If 20% of these were EVs and they adopted Samsung-type batteries that would use up to 16,000 metric tons of silver per year. This year roughly 25,000 metric tons of silver will be produced.
These are the back of the napkin numbers but any new demand for silver will be bullish. A 50- 70% jump in demand will be extremely bullish. If you add in trucks, busses, helicopters, drones, and boats you could see additional increases in silver demand.
Solar Panels
About ten years ago they were making the same projections about silver used in solar panels. In 2014, solar panels used up 5% of all silver produced. Today the industry takes 14.5% of the supply – though each solar cell uses less silver.
Anyway you slice it, the net-zero political goals will be impossible without a surge in silver demand which should at the very least put a backstop to the price. We could even see a move back to its inflation-adjusted highs of around $200 an ounce.
One caveat to this bullish silver scenario is that the battery won’t be in production until 2027 at the earliest. Meanwhile, we have rate cuts and a falling dollar to prop-up the shiny metal.
All the best,
Christian DeHaemer
Outsider Club
For Your Continued Reading:
https://payneinstitute.mines.edu/solar-surge-puts-pressure-on-silver-supply/
https://www.outsiderclub.com/the-fed-has-spoken/
https://www.outsiderclub.com/the-onion-king-of-chicago/
