Is a historic silver shortage about to send prices vertical? Sprott Asset Management CIO Maria Smirnova says we’re five years into a 1.2-billion-ounce supply deficit, and industrial demand from EVs, solar panels, and AI-hungry data centers is only accelerating. With mine output falling, exchange inventories drained, and silver’s market a tiny $30 billion a year, just a flicker of Western investment could light the fuse.
Watch now to learn:
- Why the gold-to-silver ratio screams opportunity
- How EVs double silver loadings per car
- The East vs. West demand split (and what flips it)
- Why most silver is a by-product and why that caps supply
- The price level ($50) that could unleash new mines
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Maria Smirnova 0:00
The minute that we have a little bit of makeup and silver demand, investment demand, it could completely change.
Trey Reik 0:12
Greetings and welcome to our wealthion show. My name is Trey Reich of Bristol Gold Group, and we’re visiting today with Maria sornova, Senior Portfolio Manager and chief investment officer of Sprott Asset Management. Among Maria’s many duties at Sprott. She currently serves as lead portfolio manager of the Sprott silver strategy and CO manager of the Sprott Global Goals gold strategy, as well as the recently launched Sprott gold and silver miners, ETF, which has one of the best tickers I’ve ever seen, G, B, U, G, marine and I worked together for five years at Sprott, and I learned during that time that no one has more knowledge and experience in the silver sector than Maria. So Maria, thanks for being with us today.
Unknown Speaker 1:06
Thanks, Trey, thanks for having me.
Trey Reik 1:08
Terrific. So I think the best way to begin any silver conversation is to highlight that gold and silver are more different than they are similar. Can you give us a precis on the different physical properties, you know, uses and demand compositions for gold versus silver.
Maria Smirnova 1:28
Yeah, that’s a good start, a place to start. So in terms of the physical properties, I would say that they’re actually pretty similar. Both metals are quite reflective, you know, they’re quite shiny. I would say lustrous is the proper word. Both metals are very, very good electro conductors, and both are malleable. Now, I think gold is a bit heavier than silver, so that’s a physical difference, and silver also is well known for its biasidal properties. In other words, it killed bacteria. But overall, I would say the physical properties of gold and silver are quite similar, but in terms of demand, that’s where it is quite different. Now, as you know, gold is much more expensive to buy per ounce than silver is, and therefore it it is really just used for store value. And it’s used in jewelry, investment purposes, those kind of monetary type purposes, whereas Silver has found great use in industry. Again, it’s used in medicine because of title properties. It’s used a lot in electronics because highly electroconductive is used in solar panels, because like light very well. So because silver is cheaper, it’s found a lot more diverse uses, I would say, than gold have.
Trey Reik 2:56
Yeah, terrific. So the silver Institute released its sort of industry Bible annual survey this past week, and one statistic that always jumps out at me is the recent deficit, supply, demand deficit in the silver industry. So the silver Institute estimates that the 25 deficit will be about 117 million ounces, which is down a little bit from last year’s deficit of 150 but that brings the five year deficit total to roughly, you know, 800 million ounces. So can you talk about why this has been the case and what it implies for the future.
Maria Smirnova 3:45
Yeah, absolutely, it’s something we talk about a lot with silver, because silver, as you said, has been in a structural supply demand deficit for at least five years now. You talk about the numbers, you know, the 800 million ounces, including this year. When you talk about those numbers, you’re not including exchange traded funds. I actually do include exchange traded funds. And if you include demand from those vehicles, the number actually will grow to about 1.2 billion ounces. Now, if to put that in context, total annual demand for silver is under 1.2 billion ounce so in the last or including this year, you know, last five years, I would say we’re in deficit of one year’s worth of of demand. I mean, these are really large numbers. And you did mention that last year the deficit went down, and this year is expected to go down again, and I think big reason for that actually is a lack of investment demand from the west. Now, coins and bars represent about 200 million ounces a year, and. Of the 1.2 billion ounces total demand. And that number is significantly lower than it was in 2022 2021 so a few years back, back then, the number was almost over 300 million ounces. So we have seen a lack of investment demand from the west. Interestingly, you know, in places like India, in places in the east, demand has been growing. Investment demand has growing. Exchange Traded Funds are growing there. So we’re seeing a divergence in demand for still, investment, demand for silver, between East and West. I talk about that quite a bit now, if demand returns in the West, obviously, the deficit will grow again, right? But why I say the supply demand pretty significantly,
Trey Reik 5:48
right? It could really ramp up
Maria Smirnova 5:52
absolutely, and we’ve seen it before. And what’s important to note is, while this point environment has been volatile throughout the years. Like I said, over 300,000,001 year, under 200 million the next year, industrial demand for silver has been growing quite steadily over the last few years, and it grew again last year. And that’s, of course, been driven by electronics. It’s been driven by and we can get into it more later, but it’s been driven by kind of these end uses that are a result of Silver’s wonderful physical properties that we discussed in the beginning of the interview. So I am seeing industrial demand becoming more and more important as a composition of total demand for silver. So that, to me, is very important.
Trey Reik 6:45
So the big three. Excuse me for interrupting the Big Three when I read the information, because I wanted to be at least up to speed enough to talk to you about it intelligently. But when I read about it, the three things that stick out to me are electric vehicles, photovoltaics, which are solar panels, and then just general electrification of everything. So can you give us a couple of sentences on each one of those as to why they’re important in the total picture? Yeah,
Maria Smirnova 7:16
absolutely so starting with the visa or electric vehicles. Silver. I always say silver is used in small quantities, but in many, many different endpoints, and cars or vehicles are a great example of that. We sell millions of cars a year in the world, and silver is used in things like mirrors, air conditioning unit, stereo, anything electric, right again,
Trey Reik 7:43
is there a silver in every car?
Maria Smirnova 7:47
I think there’s silver in every car, but the important part is amazing,
Trey Reik 7:52
because you certainly wouldn’t think of silver as an important input to cars.
Maria Smirnova 7:59
Well, you need connectors, you need switches, you need to conduct electricity. But as we move towards
Trey Reik 8:08
hybrid, silver serves is connectors and that type of thing,
Maria Smirnova 8:12
mostly Yes, and mirrors. And if you think about your for example, that your back windshield, not the windchill the back window of your car, you know the little line to defrost? Well, I live in Canada, so we need to defrost that has silver right to to to conduct the to conduct the heat and to cross the window. But again, as we move to electric vehicles, the loading per car of silver is increasing, and I think that the number from the silver to something like double, you know, to go from a regular vehicle to an electric vehicle. So that’s one important area. And we did read that last year, that sector continued to grow at a good pace, and will grow going forward. The second one you mentioned is photovoltaics, or solar. And solar has become a very, very important part of total silver demand. It represents about 200 million ounces a year out of, let’s say, again, I’m rounding of 1.2 billion ounces. So it’s around 17% of total demand that has been fueled by growing installation solar panels around the world. Now last year, we started experiencing more thrifting in the technology is evolving, and we have read that newer technologies have been able to thrift silver. But that doesn’t matter to me. Even if solar continues at the pace it does now, it still represents a very important part of the silver market, and it will contribute to the deficit, right? So as long as we see this kind of stable to growing trend in photovoltaics, we’re okay. And the third. Third one is electrification, and that is something harder to pin down, I would say, because it’s just such a broad term, right? But we do know that the world is electrifying. The demand for electricity around the world is growing every year, which means we have to build more, you know, power grids, more, more data centers, AI is contributing to the trend. That’s where the data centers are coming in. If you think about any consumer based electronics, from phones to TVs, etc. And especially, again, with AI, the new gadgets that are coming out that will consume silver. And I think the silver Institute is actually pointing to this kind of part of the market as forecasts to grow well going forward. So I mean, all these trends, I don’t see them reversing. I see them continuing. Because I think the world does want to have more green energy, more electricity. As developing nations are developing and their people want more electricity, that trend will contribute to silver demand,
Trey Reik 11:10
excellent. So just before we leave the supply demand topic, the on the supply side, there are a group of above ground stocks that are pretty closely followed in, you know, London and New York. And what’s been filling the supply deficit over the past five years is essentially drawing down those stocks right and how, how big are they and how close are we to, you know, lift off.
Maria Smirnova 11:45
So I think as of right now, between Shanghai, London and New York or COMEX, we have about 1.2 billion ounces sitting in those three in the last but that’s a change in the last Since 2022 so that’s the last three years. We’ve lost between 400 and 500 million ounces out of that total. So that’s, you know, again, that’s depending on which side you look at. 400 million ounces is 40% of total supply, annual supply. That’s quite substantial. Now you will say it doesn’t reconcile with the total deficits we’ve seen, and I cannot explain that difference necessarily, but we do know that these above ground exchange health stocks have declined massively. And furthermore, what’s happened in recent months, as Trump has, you know, been talking about tariffs. Metal has moved out of London and into the COMEX in New York. In fact, we’ve read about people putting silver bars on planes, which is unheard of, because, you know, it’s a multi kind of material, and flying into New York. Now, of course, Silver has been exempt from tariffs, but that has happened, and people do talk about a potential squeeze in London of the silver price. And just to kind of go a little bit further in discussion on the inventories the LBMA held, used to hold about 800 million ounces. But of that 500 million ounces was earmarked for, yes, okay, and still is actually, so the free float actually in London, and London is like the major kind of physical trade hub of the world for silver. The free float has really been ravaged in London. I’m not sure what the exact numbers are now, but I do know that millions of ounces have moved out of London because of this, you know, pre positioning for the tariffs. So we are in an interesting position. And I actually don’t think that it will be much very easy for silver to move back from New York to London. I think the metal will stick in New York. We’ll see what happens, because we’re not seeing inflows, right? And again, we’re in deficit. So where’s the metal going to come from?
Trey Reik 14:11
Interesting, interesting. So do you ever entertain expectations for sort of a blow off move in silver, or is it steady and Sure? The way we go?
Maria Smirnova 14:30
I prefer steady. But as you know, Silver has underperformed gold. I guess I will lead it to that. But you know, last time the gold the Silver ratio reached 120, to one was in COVID time. Just what COVID was kind of breaking out. And of course, what happened after that? Silver completely outperformed gold after that, right? Talking about a blow off top. So we’re now sitting, I think. Go over 100 to one in silver, gold to silver again. So I think we are reaching that extreme point again where silver could could rock and again. I think one piece that has been missing in this puzzle is Western investment demand, for some reason that’s just not transpired. So I think people have been really caught up in the gold trade and interested in gold because of various factors, but the minute that we have a little bit of pickup and silver demand, investment demand, it could completely change. So
Trey Reik 15:36
you brought up my next question, which means it was a good lead in so this gold to silver ratio, you spend a lot of your time on gold as well as silver. We don’t want to categorize you as a silver person entirely, but in the out performance of gold, can you pick out of a few you know explanations, why do you think gold? Why do you think gold’s outperforming silver to such a degree? For example, I just heard this morning that gold’s up 28% so last year, we were up 27.2 and it’s like April 20, and we’re already up 28 so what? What’s happening in the gold market? That’s that’s not catching a silver bid. Yeah,
Maria Smirnova 16:22
to your point, gold has moved very fast. Well, as we discussed in the beginning of the interview, gold is almost 100% investment, slash monetary use driven right? That means when people think of gold, it’s a safe haven asset. Is So in times of uncertainty, or when the S, P is going down, or when there’s worry about the economy, people go towards gold as an investment vehicle. And furthermore, of course, in the last since February of 2022 we’ve seen a doubling, at least a doubling, of central bank demand gold, which Silver has not benefited from, because silver doesn’t have central bank demand yet. And we are going through a period of time where there is an economic uncertainty. President Trump won’t want the election, and has introduced quite, you know, a bit of disbalance and uncertainty in the world, I would say, and that this year, that’s really driven gold higher, for sure.
Trey Reik 17:39
And not to put words in your mouth. But is it fair to assume, especially given the long tenure of history, that, given gold’s dramatic outperformance for those reasons, and the Gold Silver ratio where it is that it implies probabilities are pretty darn high, that silver is due for a little bit of a catch up here in the next you know, two to three quarters,
Maria Smirnova 18:05
I think shorter charm it, it could have a catch up. But I, I generally don’t think about that, to be honest. What I do look at is, again, the longer term picture. We it’s been a walk a long time since we’ve been in a position of where the inventories are drawing down, that’s the important part to me. We need to chew through the inventories with the deficits or for silver to really rock. Right for me, it’s a longer term squeeze, rather than a kind of quarter to quarter trading situation. Got
Trey Reik 18:41
it so moving over to the investment side. Can you talk a little bit about the various roles if there are contrasting roles for gold and silver in an investment portfolio?
Maria Smirnova 18:58
Well, to me, to be honest, gold and silver aim at the same goal in an investment portfolio. I do you know silver is the oldest currency in the world, right before gold, probably, I look at both metals and as as currency or money or store. Well, you know, I don’t like the word hard asset, necessarily, but they’re hard assets. So for me, owning gold or silver or both, and the underlying minor equities as well, by the way, are a way to diversify your portfolio to also, you know, have a safe haven asset. To me, silver should be a safe haven asset as well. It should be a great investment vehicle. So from those perspectives, I think they’re more similar to me than different Excellent.
Trey Reik 19:53
So one thing, as we narrow in on the investment opportunity of silver and silver equities, i. One thing that’s commonly misunderstood is how to use the word tiny the silver market is in comparison to gold and other commodities. Can you give us sort of a rough ranking of the size of these markets?
Maria Smirnova 20:16
Yeah, well, so I think we produce about 160 million ounces of gold a year. At the current price of gold, that translates to over $500 billion I believe, in annual kind of supply of gold, whereas silver, as I mentioned, is about a billion ounces produced a year. And the current price of silver is 30, $33 so you know, that’s just over $30 billion that’s that’s multiple. Gold is multiples bigger than silver, so it should be in it is quite easy to push the silver price around, because it is quite a small market. And again, remember that when we produce gold, most of it stays on the ground because, either in jewelry or in people’s vaults as coins or bars, it doesn’t really disappear, whereas with silver, over half, or about half of demand is industrial, so and a lot of the time it’s not recycled back again because it’s used in such small quantities, but in many different uses, it’s quite hard to recycle it, so a lot of the silver just disappears, never to be seen again, which makes the market that you know, the market even smaller, right?
Trey Reik 21:36
I think another thing that’s commonly misunderstood about silver production is that the vast majority of silver is produced as a byproduct of mining. Something else. Can you talk a little bit about why that’s the case? So I
Maria Smirnova 21:55
I don’t like to think about silver, you know, produced as a byproduct. What I do say is that silver does exist in nature, mostly with other metals, right? And we have different kinds of deposits. For example, silver comes with gold, or silver comes with lead, zinc, or silver comes with copper. Those are kind of the primary types of deposits. And sometimes on, on a rare occasion, we have a pure mind where it’s just silver. But why is that important? Because, you know, that means that silver supply also depends on what’s happening in development, mind development for lead and zinc. You know, and lead and zinc are out of favor. Those mines won’t get developed. If we have a shortage of copper development, then obviously silver won’t come as a byproduct of that, as you said. So it makes the forecasting, the supply side of things a little more tricky. But what I will say about supply is going back 10 years. If you look at what we mine per year in terms of silver total, it doesn’t matter what kind of mine it comes from. If we look at it back 10 years, that supply was actually higher than it is today, believe it or not. So mine supply has not grown in silver in the last 10 years. So in 2016 it was 900 million ounces, and last year was 820 million ounces, we lost 80 million ounces Since 2016 per year. What does that tell me? That tells me it’s very hard to bring new mines into production. There’s been very little focus on developing new silver mines, and we haven’t had many discoveries. Discoveries have dwindled just like they’ve dwindled in gold. By the way, we have a lack of discoveries in both deposits as well, and that is contributing to my thesis of a structural deficit in silver, you know. And I spend a lot of time every day looking for new stories, looking for new companies that are exploring for silver. And we just don’t have a lot a lot of names to talk about. We don’t have a lot of new and exciting stories with big discoveries. Mining is a tough business, and it takes many years to bring a mine from first discovery into production. So that you know, along
Trey Reik 24:33
those lines, silver Institute annual report, I noticed eight of the top 10 silver producers in 2024 were the big, you know, conglomerate integrated, you know, precious and base metal producers. So it is, it is challenging, I would assume, for you to find a. Investments that really reflect their silver content. Is that true?
Maria Smirnova 25:06
Well, that’s why I focus on small, small to mid cap name and to your point when, if you’re looking at a conglomerate, do you think silver is a big and important part of their business? Probably not. That just means that, you know, they’re not going to dedicate a lot of resources to finding new silver deposits, right? So when we talk about silver miners, we actually talk about the segment where they are a smaller company, and they make a business out of looking for silver mine. Do
Trey Reik 25:38
you see any signs that the amount of dollars that are devoted towards silver exploration are going to change anytime soon. Is there, is there some feedback loop that sort of requires investment, or are we just in this sort of purgatory forever? So
Maria Smirnova 25:59
you know what I think would change the amount of money that’s being invested in the silver sector. Is a higher silver price. I don’t think $33 is the price anymore, which people are excited to explore for silver. I think you need $50 or higher. Now, having said that, I do see companies raising money right now, and I always say that if there’s a good deposit or a good story, they will find the money for exploration. And I always do tell companies that exploration should be an important and major part of their capital allocation, you know, story or capital allocation. So, so kind of that’s where we are, but again, to stress we need higher silver prices for the industry to start really kind of being excited about silver exploration.
Trey Reik 26:50
Great, and I looked at your publicly disclosed holdings in the silver equity fund that you sub advised for nine point and without naming individual names, I noticed the market cap range of your top 10 holdings ranges from 635 million on the low end to 38 billion on the high end. Is there any particular industry sector with which you’re especially enamored at this point in the cycle, or do you try to always be present in all industry segments, market cap wise?
Maria Smirnova 27:26
Well, right now we’re, I think we’re in a we’re not in a roaring bull market for silver equities right now. If we were, I think I would have a much larger exposure to juniors like, you know, sub 500 million market cap companies right now, I think the sweet spot is production, because, you know, that’s how a company benefits from a higher gold or a higher silver price. Exploration companies, really, you know, again, they need to raise money to survive, whereas if you have some production, then you are able to generate cash flow and resources to push your business forward. So I think right now we’re in that kind of mid cap to production phase. But if we do see higher silver prices, I think that would be the time to increase exposure to the more junior company.
Trey Reik 28:25
Excellent. So just as sort of a wrap up, general question on a scale of one to 10, you’ve been doing this for 15 years. How excited are you about silver in 2025 and why?
Maria Smirnova 28:43
Excellent question. Well, again, I followed silver for a while now, and as I mentioned before, we really haven’t been in this you know, we’re we’re five years into a structural deficit. We’re seeing inventories disappear. We’re seeing lack of new production. We’re seeing growing demand. We just need to flip that little switch of investment demand in the West, and we’re going to be off to the races. So I would say, you know, if you think about the big picture in silver relative to, let’s say, even 10 years ago, it’s and you know, you add to that, by the way, all those trends we discussed that are going to be hard to reverse. The electrification trend, the huge one, it’s pretty exciting if you think about it longer term. You know, if we kind of stop focusing on the fact that silver is underperforming gold, I think that silver could do great things, just needs a little bit more of a push.
Trey Reik 29:44
So when you mentioned investment demand, if people were going to try to follow that on their own, is the most transparent way to follow that ETF inflows or coin and. Bars, sales or What? What? What metrics should people be looking at to see when Western investment demand is heating up?
Maria Smirnova 30:10
ETFs are transparent, but they don’t capture the whole picture. Obviously, ETFs have actually been in positive territory last year. So ETFs have actually been good contributors to investment demand. Is the coin and bars that have suffered in last couple of years. What’s good place? Yeah, I mean, ETFs are good. Just trying to read, in general, what’s happening in the market, it is definitely difficult to get good data on silver, especially because a lot of the demand comes from China and India, India specifically, and it’s not so transparent to see what’s going on. Again, I try not to focus on short term. I try to think about the longer term picture. And you know, as you mentioned, this little Institute published a new report yesterday or last week, I apologize, and it’s a wealth of information about silver. So that’s a good place to start. I would say
Trey Reik 31:09
excellent. So Maria, thanks, and you warned me ahead of time that you didn’t want to be put on the spot. About individual names, etc, which we will honor. But for viewers who are interested in Sprott products and what you guys offer, what’s the best way for Canadian and US investors to learn more about Sprott products and then get you know involved in what you have to offer? Is it simply going through the website, or are there other, you know, ways to come in, a side door, a back door. What do you recommend?
Maria Smirnova 31:47
Well, we don’t need a back door. Sprott.com that’ll be helping always. Sprott.com I will say that, and I’m biased, of course, but I will say that Sprott has done a tremendous job of growing our resource library, our marketing department is amazing. We have many contributors to articles. So we write a wealth of articles, and it’s not just about gold and silver. We write about uranium, we write about copper, we write about critical minerals. And not just articles. We do webcasts. We do podcasts. You know, again, just go to our website. You can learn all about our products. We have a wealth of products as well. We have physical products, we have ETFs. We have actively managed funds, um, lots of information on our website.
Trey Reik 32:39
And I think it’s fair to say the Sprott physical ETFs, the bullion ETFs, in a variety of metals and uranium, have become pretty much the go to global spot, right? Aren’t you guys the biggest in that category?
Maria Smirnova 32:55
Uh, we’re pretty big. I don’t know if I can, I don’t want to make a claim that I can’t support, but pretty big, and I will say that, you know, when Eric Sprott started the physical and silver bullion exchange traded funds back in the day, one of the key things that we pride ourselves on for physical funds is actually owning allocated metal, whatever the metal is, we pride ourselves on the fact that we have it. It’s not leased out. It’s not, you know, hypothetically, or whatever the word is. We have it, you know, we audit it. We audit it. I believe, annually, we know where the metal is, and so that’s something that’s very important to us.
Trey Reik 33:44
Excellent. Well, Maria, thank you very much for your time. And these are exciting times for gold. And my personal expectation is the summer is going to be a very exciting time for silver. That’s just my view. So we look forward to catching up with you in six months or so and see how things have progressed. So thanks, Maria.
Unknown Speaker 34:06
Thank you very much for having me. You
