Silver prices could see significant increases during the upcoming rate-cutting cycle. Artificial intelligence is emerging as a major new source of demand, according to Peter Krauth, who authors The Great Silver Bull and publishes Silver Stock Investor. Silver’s historical performance AI demand could drive growth.
Speaking at Xplor 2024 in Montreal, Krauth analyzed historical data showing remarkable silver performance during rate-cutting cycles. Silver’s historical performance AI demand could drive growth further. His research revealed that in the past three cycles, silver prices rose an average of 332% from bottom to peak. This generally occurred over one to two years following rate cuts.
The potential U.S. recession expected in early 2025 could further boost silver’s prospects. Research by Incrementum found that silver historically outperforms gold both before and after recessions. Krauth suggests that post-recession government stimulus spending typically favors infrastructure projects. These projects heavily utilize silver in green technologies like electric vehicles, solar panels, wind turbines, and charging stations. Silver’s historical performance AI demand could drive growth in these sectors as well.
AI could drive additional silver demand through two main channels. First, silver is a crucial component in the microchips needed for AI systems. Second, the massive energy requirements for AI data centers may accelerate solar power adoption. This relies heavily on silver-based components and aligns with the trend that could drive growth.
Krauth highlighted the exponential growth in data processing needs. Notably, 2025’s data generation will exceed the total global data produced between 2010-2016 by 50%. While major tech companies like Microsoft, Google, and Meta are exploring nuclear power for their data centers, Krauth believes solar power will become the preferred alternative for other companies. This is due to faster permitting and easier implementation.
Solar parks adjacent to data centers could offer an attractive self-contained power solution. This would allow facilities to operate independently from the grid while driving increased silver demand through solar panel production. Ultimately, it could drive growth in this innovative energy approach.
