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Hidden Military Demand for Silver: The Game-Changer Behind Rising Prices

Mike Cianciabella | October 23, 2024

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Silver’s Secret Military Demand: The Hidden Force Driving Price Growth

After enduring months of stagnant trading and being largely eclipsed by gold’s soaring prices, silver is now awakening, climbing above $34. This renewed interest is partly attributed to a less recognized yet pivotal source of demand that could potentially ignite silver’s price trajectory to unprecedented heights in the near future.

A recent report from The Jerusalem Post highlights the extensive use of silver in consumer electronics and renewable energy; however, it underscores that the military and aerospace sectors’ applications remain under-discussed. The report states, “Recent analysis suggests that military usage of silver may be substantially greater than any other industry category, including electronics, solar panels, and investment demand combined.” This revelation raises vital questions regarding the transparency of silver demand data and its implications for future pricing.

## Government Secrecy and Silver Demand

Historically, central banks and prominent asset managers disclose information about silver inventories, purchases, and sales. However, since 1995-1996, five key U.S. government agencies, including the Department of Defense (DoD) and the Department of Energy, have ceased reporting on silver inventories, leading to speculation about the true extent of military demand.

The military utilizes silver in an array of equipment—rockets, missiles, communication devices, radar systems, and more. For instance, silver is said to be found in the tip of every Tomahawk cruise missile, as noted by Andy Schectman, a well-known authority in precious metals. However, the total consumption of silver by the DoD is never disclosed, hinting at a demand that could surpass existing estimates.

Increasing Military Demand Amid Global Tensions

The report cautions that military demand for silver may eventually outpace traditional industrial applications as technological advances continue. With escalating geopolitical tensions and the potential for conflict, the military’s reliance on silver is expected to rise, further influencing market dynamics and pricing.

One of the properties that make silver particularly appealing for military uses is its conductivity, alongside its antimicrobial qualities, corrosion resistance, reflectivity, and heat conductivity. The military’s demand remains classified, with limited public knowledge on specific applications; nevertheless, these vital properties are likely significant in driving silver’s demand.

## Industrial Demand and Import Reliance

In conjunction with military applications, silver’s known industrial uses, which include solar energy technology, medical equipment, batteries, semiconductors, and water purification, account for over half of annual silver demand globally in recent years. Major consumers include the U.S., Canada, China, and India, with the U.S. heavily reliant on silver imports—a staggering 6,500 tons were imported in 2021, primarily from Mexico and Canada.

Interestingly, silver’s absence from critical material lists published by the U.S. Department of Energy and the U.S. Geological Survey in 2022 has raised eyebrows, especially considering its growing importance across various industries. Experts argue that given silver’s strategic capabilities, its exclusion from these lists warrants serious reconsideration.

Global Moves to Classify Silver as a Strategic Metal

The significance of silver is becoming increasingly recognized, with countries like Russia moving toward labeling the metal as strategically vital. The federal budget draft from Russia indicates a desire to include silver among its reserve assets, emphasizing its potential to support the economy and meet industrial requirements in emergencies.

Moreover, as reported by Kitco News, recent announcements from Russian officials confirm plans to expand holdings of silver and other precious metals, positioning them as key components of national security and economic strategy. This move aligns with broader trends as developing nations explore silver’s military applications, posing a challenge to U.S. monetary policy.

## Implications for the Silver Market

The combination of substantial military demand alongside diverse industrial applications could reshape the silver market. As recognition of silver’s true demand escalates, it could engender higher prices. Acknowledging silver’s strategic importance, both for military and industrial purposes, may prompt increased governmental interest in securing supplies, ultimately impacting supply and price dynamics.

In conclusion, the interplay between military demand and industrial use signals potential re-evaluation of silver as a critical resource. The secretive nature of military applications, paired with known industrial usages, establishes a compelling case for investors and policymakers regarding silver’s pivotal role in national security and technological advancement. Understanding this complex dynamic will be essential as the silver market continues to evolve.