The electric vehicle (EV) revolution is charging ahead, and a critical new player might soon steal the spotlight: solid-state batteries. Samsung's recent breakthrough in silver-based solid-state battery technology could not only transform the EV landscape, but also send shockwaves through the silver market. These batteries promise a 600-mile range on a single charge, a 20-year lifespan, and a mere 9-minute charging time. With an energy density of 500 Wh/kg, nearly double that of current mainstream EV batteries, this technology could revolutionize the industry.
The potential impact on demand for silver (SIU24) is substantial. Estimates suggest that each solid-state battery cell could require approximately 5 grams of silver, with a typical 100 kWh battery pack potentially using up to 1 kg of silver. If 20% of global car production adopts this technology, it could translate to an annual silver demand of 16,000 metric tons.
For investors looking to capitalize on yet another expected source of rising silver demand, two silver exchange-traded funds (ETFs) stand out: the iShares Silver Trust (SLV) and the abrdn Physical Silver Shares ETF (SIVR). These ETFs closely track the price of silver, and provide a convenient way to gain exposure to the precious metal without the hassle of storing and insuring physical bullion.
Let's examine these ETFs more closely and explore how they could help you ride the wave of the silver surge.
iShares Silver Trust (SLV)
The iShares Silver Trust (SLV) is a prominent exchange-traded fund (ETF) designed to provide investors with a cost-effective way to gain exposure to the price of silver. Managed by BlackRock (BLK) Financial Management, SLV was launched on April 21, 2006, and is structured as a grantor trust. This structure means that each share of the ETF represents a fractional undivided beneficial interest in the net assets of the trust, which primarily consists of physical silver bullion held in a vault by JPMorgan Chase (JPM), the custodian institution.
SLV tracks the price of silver as determined by the London Bullion Market Association's (LBMA) Silver Price, offering investors a direct play on the silver market without the complexities of futures contracts. This physically backed methodology eliminates issues such as contango and backwardation, which can affect ETFs that derive their value from futures contracts. SLV has total assets under management (AUM) of approximately $13.57 billion, with a relatively low annual expense ratio of 0.50%.
Over the past year, SLV has returned 17.9%, and is up 23% on a YTD basis. With the shares down 9% from May highs, now could be an appealing entry point for the next leg higher.
With average volume of 16 million shares and an active options market, SLV offers plenty of liquidity for both short-term speculators and long-term investors.
As silver demand looks set to rise, thanks in part to tech innovations like Samsung's solid-state EV batteries, SLV could be a savvy pick for investors looking to capitalize on higher prices for the industrial metal. Given its straightforward structure and robust volume, SLV stands out as a compelling option for those eager to capitalize on these exciting trends.
abrdn Physical Silver Shares ETF (SIVR)
The abrdn Physical Silver Shares ETF (SIVR) is another great choice for investors who want to get in on the silver action. Just like SLV, SIVR offers a simple and affordable way to invest in silver without the fuss of handling the physical metal or diving into the futures market. This ETF is backed by real silver bullion that's kept safe and sound in vaults.
In terms of performance, SIVR has gained 22.8% YTD, and 17.8% over the past year, highlighting its potential as a hedge against inflation and market volatility. However, like many commodity-based investments, SIVR's performance can be volatile, and its one-year return contrasts with a longer-term annualized return of 3.2% over the past decade.
SIVR is designed to closely follow the spot price of silver, minus the trust's expenses, which are pretty low at just 0.30%. This makes it a great pick for investors who want to keep costs down. The fund has been around since 2009 and is managed by abrdn PLC, with a hefty $1.37 billion in assets under management. This impressive AUM shows just how much investors are digging silver these days, both as a precious metal and an industrial powerhouse.
That said, with SIVR's daily volume around 765,000 shares and a somewhat thinly traded options market, speculators in search of a more active trade may prefer the higher-volume SLV.
For those looking to add some diversity to their portfolios with a focus on silver, SIVR provides a straightforward and efficient way to get in on the action.
Conclusion
In conclusion, the rise of silver solid-state batteries in the EV industry could be a game-changer for silver demand, and a compelling opportunity for investors. With ETFs like SLV and SIVR offering convenient and cost-effective exposure to the silver market, now might be the perfect time to consider adding some silver to your portfolio. Whether you're in search of a currency hedge, or simply betting on rising industrial demand for the precious metal, these ETFs provide a straightforward way to potentially profit from silver's promising trajectory.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
