How AI and the Energy Transition Are Leading the Precious Metal Market Surge

Precious metals have always been a way to store value. People bought gold and silver to preserve wealth. Since metals don't react to inflation and don't follow currency markets, they are excellent for keeping wealth when paper money and stock markets are struggling. 

Another dynamic affects the value of precious metals. These materials are also used in industry. This is especially true of silver and platinum. Gold is also used in the tech sector. 

While investment and the jewelry industry are the primary drivers of precious metals markets, demand is also affected by industry. This is even more true today, with solar energy and computer processors needed for the AI revolution driving demand higher. 

Precious Metals in AI-related Computer Hardware

Image by Gianluca

Gold, silver, and platinum are all used in small amounts in the computer chips used for processing AI-related data. 

Gold in the AI Industry

Gold is a great store of value because it doesn't degrade. Its longevity and reliability also mean it's excellent for use in computer systems. 

Gold brings reliability and performance to connectors, wires, motherboards, and computer chips. Trace amounts of gold are in components like Ethernet cables and bonding wires. 

AI systems require thousands of connections. Gold keeps them all stable. But it does more than this. It ensures they can transmit the huge amounts of data AI systems need. The metal ensures the flow of data does not lag or stop. 

Silver in AI

Silver conducts electricity as well as any other material. It is important for power delivery in AI systems. Silver is used in power delivery systems for AI processors. It can deliver a high amount of electricity reliably without degrading. 

It is also used as a thermal conductor. Why is this important? The amount of power AI systems need generates a lot of heat. Silver and silver-based materials move this heat away from important components so that they don't get too hot. In other words, silver keeps the boards and chips cool enough to keep functioning at high speeds. 

Platinum in AI

Platinum is used in the manufacturing of the advanced chips needed for AI data centers. During production, platinum sensors inside factory machinery can continue to take accurate readings despite the very high temperatures needed for production. 

Platinum can also serve as a catalyst (starter) for producing the gases needed for making semiconductors. 

All three metals are required in very small amounts. However, overall, tech manufacturing can affect precious metals markets because of the scale of the industry. 

Silver in the Energy Transition

Image by Martin Baumann

Silver is essential to the solar power industry. Why? Silver is one of the world's best conductors of electricity. It can move electrical currents with a minimal loss of energy. It makes solar panels more efficient so that they can capture and transmit the maximum amount of energy possible. 

Silver is the main component in a paste that makes up the photovoltaic cells on a solar panel. These are the cells that collect electricity from the sun. Silver is also a component in the electrical contacts and power distribution system (busbar) that carries the current out of each cell.

Silver still performs in all temperatures and conditions. Its durability is extremely important because panels are usually on rooftops or fields where they are exposed to intense heat and cold (depending on the climate). 

While some producers use silicon-based materials instead of silver to reduce costs, silicon is less efficient. 

Effects on the Silver Market

Each solar panel uses 10-20 grams of silver. By 2030, there will be 10 million solar installations in the U.S. Canada has 96,000 onsite installations, including nearly 200 utility-level solar fields. 

Solar energy is one of the biggest drivers of silver markets. This is why the spot price of silver sometimes rises faster and has more volatility than gold. 

What does this mean for silver investors? They need to be aware of market trends in solar energy and panel production. The spot price of silver could ebb and flow depending on demand, production, and import/export trends. Legislation and clean-energy mandates in Canada, the U.S., and other countries around the world could cause short-term price spikes. Meanwhile, advances in the use of other materials or improvements in silicon-based panels could cause demand for silver to fall. 

How Do AI and Energy Affect Precious Metals Overall?

In general, it can pay for silver, gold, and platinum investors to pay attention to the use of precious metals in manufacturing and other industries. 

Gold is primarily a store of value. Its use in the jewelry industry is consistent. Currently, it has a more limited role in industries outside of finance and investment. This means prices are more stable and aren't affected as much by industrial demand. Silver and platinum, because they have more industrial uses, are more likely to be affected by demand. This is also important to keep in mind during times of economic crisis or inflation. 

Because of its ties to industry, silver may be more affected by economic problems than gold. While both are still good for storing value, gold is less volatile and better for long-term investment. At the same time, silver can experience bigger price swings based on economic factors. This could be attractive to investors who want a bit more in terms of risk-reward ratio.

Get Precious Metals from Sprott Money

Sprott Money offers physical gold, silver, and platinum bars and coins from reputable mints like the Royal Canadian Mint, Perth Mint, and Royal Mint. Our selection allows investors to diversify their portfolios and make purchases based on current market conditions and demand for metals. 

We also buy coins and bars, allowing investors to easily make adjustments to their portfolios as needed. Meanwhile, tools like news analysis from our experts and spot price charts and quotes help keep investors up to date on the latest trends and price movements. 

Visit our site today to see which coins and bars fit with your current investment strategy and the movements of the gold, silver, and platinum markets.