SILVER’s Reddit-inspired surge to a nearly eight-year high could reverberate across supply chains from solar manufacturing to coin-minting if it holds.

The critical metal is used in such a wide variety of products and goods that a sustained run-up in prices would have implications across entire sectors, especially the energy transition. Because of its conductivity, silver is a key ingredient in electronics like printed circuit boards and solar panels. It’s also used in everything from bandages to hospital paints. To what extent each industry will be affected depends on how long the rally lasts.

Surging prices of the precious metal threatens to boost costs for solar-panel producers that use a silver paste for electrical contacts on photovoltaic equipment. At current prices, the metal accounts for about 4.7% of the cost of a panel, according to Jenny Chase, solar analyst for BloombergNEF. Panel manufacturing accounts for about 10% of global silver demand.

“If you’re looking to buy solar panels, it might be wise to wait until the second quarter,” Ms. Chase said.

Demand for silver coins and bars were already on the rise before this year’s frenzy, with consumption increasing in 2020 for the fourth straight year, according to the US Geological Survey (USGS). Now, as investors pile into the physical market, premiums on American Eagle silver coins have risen to close to $5 from a normal level of $2 over the past three days.

About 28% of the world’s silver went into electronics last year — in products like computers, televisions, cell phones, circuit boards, microwave ovens and more. But in most cases, silver is a fairly small element of the costs of these high-value goods, suggesting that a larger and more sustained price move would be necessary to affect the prices of final products.

For eons, silver has been respectable runner-up to gold when it comes to rings, earrings and cutlery, making up more than a quarter of the global market for the metal. But global demand for silver in jewelry and tableware contracted 23% and 34%, respectively, last year, the USGS said.

The gelatin silver process was the backbone of black-and-white photography, using silver salts suspended in layers of gelatin to create images. But as of last year, photography only comprised 3% of the global silver market. — Bloomberg