Money and Gold: Can investing in silver bars generate remarkable returns?

Why Silver Bars Are Attracting the Attention of Global Investors

In the past year, the (Silver) market has recorded new all-time high prices. This trend is no coincidence but results from structural changes occurring in the global market. International analysts believe this opportunity could yield returns surpassing gold in the near future.

The Long History of Silver Bars as Currency

The importance of Silver is not new. Before the advent of digital technology and modern economies, humans relied on Silver as a medium of exchange and store of value for over 4,000 years.

Historical evidence indicates that:

• Since 3000 BC, Silver has been used as a medium of exchange in the form of rings, bars, and standardized metal ingots.
• In the 16th century, Spain produced Silver coins, which became the first globally recognized currency and circulated across all continents.
• Silver remained a legal tender in the United States until 1857.
• Although the official role of Silver bars ended after the abolition of the Silver Standard in 1935, Silver bars and coins for investment have continued to be produced to this day.

Why Silver Is Essential for Modern Technological Development

Silver’s physical properties cannot be fully replaced by other metals, making it an indispensable component in developing future technologies—these include:

• Superior electrical and thermal conductivity: making Silver essential in all electronic devices.
• High reflectivity: a key factor in improving solar panel efficiency for converting sunlight into electricity.
• Antibacterial properties: widely used in medical industries, from bandages to surgical tools and water filtration systems.
• Flexibility and ease of processing: crucial for microelectronics requiring small, complex components.

These factors have become the main drivers of Silver demand today, whether in the transition to clean energy, electric vehicle development, 5G networks, or AI infrastructure—all rely heavily on Silver.

Key Factors Driving Silver Price Changes

Silver prices do not move randomly but are controlled by complex structural and economic factors.

Macroeconomic Factors

Global market outlooks heavily influence Silver prices:

• Monetary policies and interest rates: Central bank rate cuts directly impact asset prices. Lower interest rates in 2025 are a significant catalyst for higher Silver prices.
• Dollar exchange rate fluctuations: Generally, Silver has an inverse relationship with the strength of the US dollar. When the dollar weakens, investors holding other currencies can buy Silver at lower prices, increasing demand and pushing prices higher.
• Inflation and geopolitical uncertainty: Silver is viewed as an inflation hedge and safe haven during economic uncertainty.

Fundamental Factors: Supply and Demand Imbalances

A pivotal change comes from the World Silver Survey 2025, revealing that the Silver market is facing a “severe structural deficit”—meaning global demand exceeds combined production and recycling capacity. This situation has persisted for four consecutive years.

Unprecedented demand:

• Industrial demand hit a record 680.5 million ounces in 2024, accounting for about 59% of total demand.
• Growth driven by future technologies, especially clean energy, electric vehicles, 5G electronics, and AI.

Insufficient supply expansion:

• Disrupted production.
• Silver as a byproduct of lead, zinc, and copper mining has limited capacity.
• Silver inventories are decreasing.

This scenario indicates a “Perfect Storm” in the market: growing and inflexible demand colliding with shrinking and inflexible supply, leading many analysts to forecast significant future price increases. This deficit is not temporary but is becoming the new market equilibrium.

Comparison: Gold vs. Silver Bars - Which Asset Is Right for You?

In the precious metals world, gold is considered the standard choice, but a deeper analysis of Silver reveals important differences.

( Gold/Silver Ratio Indicator

The “Gold/Silver Ratio” or GSR is a tool to assess whether Silver is undervalued or overvalued relative to gold, indicating how many ounces of Silver are needed to buy one ounce of gold.

Importance of this indicator:

• During market panic, such as March 2020 during COVID-19, investors rushed to safe assets: gold. The GSR soared to 124:1, the highest in history.
• As confidence returned, investors took on more risk for better returns, causing the GSR to shrink. In 2011, it dropped to 31:1.
• Currently, the GSR remains high at around 84:1, above the market average, indicating the market has not fully priced in Silver’s industrial fundamentals, creating opportunities for investors.

) Market Characteristics

Market Size:

• Gold market: approximately $30 trillion.
• Silver market: approximately $2.7 trillion.

This significant size difference means that the same amount of capital flowing into Silver will have a larger impact on its price.

Volatility:

• Silver prices are 2-3 times more volatile than gold.
• This means: in a bear market, Silver may decline more sharply, but in a bull market, it tends to surge faster and higher.

Roles and Holdings:

• Gold: held by central banks as reserves; primarily a “Safe Haven Asset.”
• Silver: not held as reserves by central banks but as a “Hybrid Asset”—part precious metal, part industrial commodity—its price is more closely linked to economic cycles. It also benefits from growth drivers in industrial demand that gold does not.

Conclusion: Choose Silver or Gold

• For stability-focused investors: gold remains the secure choice.
• For risk-tolerant investors: Silver’s current fundamentals—low prices relative to gold, inflexible supply, and surging industrial demand—make it an attractive growth investment.

4 Investment Methods for Thai Investors

( 1. Physical Silver Bars and Coins

Traditional investment method: purchasing Silver bars or coins for personal ownership.

Advantages:

• Ownership of tangible assets.
• No counterparty risk.
• High privacy.

Disadvantages:

• Requires significant initial capital.
• Incurs premiums and spreads above global market prices.
• Storage costs for safety (safety deposit boxes, insurance).
• Lower liquidity compared to other channels.
• Risks in verifying purity.

Available in Thailand: Many leading gold and silver traders in commercial districts.

) 2. Investment via Funds and Mining Stocks

Indirect investment through financial intermediaries.

Funds:

• Investing in funds with policies focused on international silver mining stocks.
• Examples: Funds investing in global silver ETFs or those covering both gold and silver mining companies.

Mining Stocks:

• For investors familiar with foreign stock markets, directly buying shares of major Silver producers such as Pan American Silver, Wheaton Precious Metals, Fresnillo, or Hecla Mining.

Advantages:

• High liquidity; easy trading on stock exchanges.
• No storage issues.

Disadvantages:

• Company-specific risks: management, production costs, political risks in mining regions.
• Stock prices may not always track global Silver prices precisely.

( 3. Trading via Futures Contracts

Tools for experienced investors with deep understanding of derivatives markets.

TFEX Silver Online Futures:

• Contracts referencing 99.9% purity Silver prices globally.
• Contract multiplier: 3,000 times the reference price.
• Cash settlement.

Advantages:

• Low initial investment.
• High leverage.
• Profitable in both bull and bear markets.

Disadvantages:

• Very high risk; requires deep understanding.
• Contracts have expiration dates.
• Suitable only for professional investors.

) 4. Trading via CFD (Contract for Difference)

Growing in popularity among retail investors, especially in Thailand.

What is CFD?

• A contract between investors and brokers to speculate on Silver price differences, often using the symbol XAGUSD, between opening and closing.
• No ownership of the actual asset required.

Advantages:

• Low initial capital.
• Leverage enhances buying power.
• Profitable in both rising ###Long( and falling )Short( markets.
• No storage, insurance, or purity verification costs.
• High liquidity; quick opening and closing of positions.
• 24/5 trading aligned with global market prices.

Disadvantages:

• Leverage risk: potential for rapid losses.
• Counterparty risk; choosing a reputable broker is essential.

) Comparison of 4 Investment Methods

Pros and Cons of Investing in Silver

Opportunities and Advantages

1. High Return Potential: Due to higher volatility and historically lower value compared to gold, Silver tends to generate higher percentage gains during bull markets.

2. Growing Industrial Demand: The trend toward clean energy and digital economies will continue to drive Silver demand for many years.

3. Easier Access: Silver’s lower per-ounce price makes it more accessible to retail investors, allowing for position building with less capital.

4. Inflation Hedge: Silver’s long history of over 4,000 years as a store of value helps protect wealth from currency devaluation.

Risks and Disadvantages

1. High Price Volatility: Greater fluctuations can lead to substantial gains but also significant losses. Silver investors must accept higher risk than gold investors.

2. Economic Cycle Sensitivity: Since 55-60% of demand is industrial, Silver is more sensitive to economic slowdowns than gold. Manufacturing demand may decline during recessions.

3. Storage Costs for Physical Silver: Owning physical Silver entails costs for storage, insurance, and theft risk.

4. No Income or Dividends: Silver does not pay dividends or interest; returns come solely from price appreciation.

Summary: Should You Invest in Silver or Gold?

Silver has evolved from being seen as a “poor man’s metal” to a vital asset in the global economy.

Whether Silver suits you depends on your investment goals and risk appetite. For modern investors seeking growth opportunities, choosing the right investment tools is crucial.

Regardless of the method, thorough understanding and market analysis are essential for making informed decisions aligned with your objectives and risk capacity.