"Learning Silver for Beginners" I previously developed an interest in silver, but attending a funeral delayed my research. There's a lot of talk in the market, but most people just spout off whatever comes to mind. So I had to do my own research. Basic Introduction: Silver possesses both "monetary attributes" and strong **"industrial applications (utility)**. Its market capitalization is much smaller than gold, and once funds flood in, its volatility is 2-3 times that of gold. Silver's total market capitalization is approximately 3 trillion, nearly twice that of Bitcoin. Why is it rising? 1. Macroeconomic interest rate cuts; 2. Industrial demand squeeze: mainly in the photovoltaic sector; 3. Depleted inventory; 4. China restricts exports; China will implement licensing management for silver exports starting January 1, 2026. 5. China controls approximately 60%-70% of the global refined silver supply. 6. Short squeeze operations by speculators; Silver Demand: 1. 60% of silver is consumed industrially, and 20% is used in jewelry. 2. With the explosive growth of global (especially Chinese) photovoltaic (PV) installations, the proportion of silver used in PV has surged from 5% a decade ago to 20%-30% today. 4. Silver prices in 2025 actually decreased compared to 2024. 5. Among industrial demands, PV is growing rapidly, accounting for 16%. 6. AI and Electric Vehicles: AI servers, 5G base stations, and new energy vehicles (EVs) all require large amounts of silver for conductive contacts. Silver Supply: 1. By-product Mines: There are very few dedicated "silver mines" in the world. 80% of silver is a **"by-product"** of copper, lead, and zinc mining. 2. Even if silver prices skyrocket, mining companies will not specifically expand copper mining capacity for this by-product. Supply is extremely rigid, and rapid production increases are impossible. 3. In 2024, recycling volume increased by 6%, reaching 193.9 million ounces, a 12-year high. The most significant increase in industrial waste weight was mainly due to the treatment of waste ethylene oxide catalysts. Recycling accounts for approximately 20% of total supply. 5. Global proven reserves: Approximately 720,000 tons. Global annual production: Approximately 830 million ounces. Supply and demand: 1. Current year's mining production + current year's recycling + inventory outflow = current year's total demand. 2. Overall, supply is slightly less than demand. 3. According to data from **The Silver Institute**, the global silver market has been in a state of "supply shortage" for several consecutive years. Above-ground inventory (Vault Inventory) is being gradually depleted. 4. Silver inventories: LBMA (London Bullion Market Association) warehouses: This is the world's largest physical silver trading center. COMEX (New York Mercantile Exchange) warehouses: US futures delivery warehouses. SGE (Shanghai Gold Exchange) warehouses: China's inventory. LBMA: Inventory levels have decreased by approximately 30%-40% from their highs several years ago. 5. The current silver market is on the eve of a **"Liquidity Crunch"**. Core Valuation Indicator: Gold-Silver Ratio Gold-Silver Ratio = Gold Price / Silver Price Average: Around 60-70 over the past few decades. Extremely High (>80): Indicates silver is severely undervalued, presenting a good buying opportunity. Extremely Low (<40): Indicates silver is overheated, suggesting a return to gold. Core Judgments: 1. Total silver demand in 2025 was lower than in 2024. Therefore, attributing the surge in demand and price increases to new energy and AI is simplistic. 2. I tend to believe that long-term industrial demand led to a decline in spot inventories, triggering a short-term short squeeze by speculators. 3. Naked short selling in the futures market makes short sellers extremely vulnerable. Futures market manipulators are buying heavily, demanding physical delivery at maturity. 4. Simultaneously, this situation allows for price increases in the spot market, triggering panic buying by short sellers. 5. After the short squeeze-driven price surge and subsequent pullback, the supply shortage in silver is unlikely to change in the medium to long term. This makes it a valuable long-term investment.