A Mining.com article on the impact of solar power on the coal business provided some interesting numbers for metals investors, particularly silver investors. Silver is only mentioned in passing, as the point is that decreasing costs of solar power could be a far greater threat to coal prices than cheap natural gas is. Even that mention is not positive, stating that new solar panel designs use unspecified, smaller quantities of silver. But sometimes less is more.

Suppose the new designs use 50% less silver. That seems unlikely, but let’s go with it as a worst-case scenario. Now suppose that this, along with other cost reductions, encourages the proliferation of solar power by a factor of 10. If that happened, the solar industry would require 500% more silver to meet demand.

Does a tenfold increase in solar power generation sound like a pipe dream? Maybe, but when that power is virtually free after installation, and energy storage (for cloudy days) is improving all the time, some increase is all but assured. According to the article, solar accounts for about 1% of the energy consumed in the US. An increase to just 2% would make up for the smaller amount of silver used in each panel, if the reduction is as much as our made-up 50% figure—even if the US energy pie remained the same size. Any greater increase would really move the dial on silver demand.

These are trends in motion that will take time to manifest themselves in prices, but apart from short-term fluctuations, demand for silver looks very good going forward. Meanwhile, given that most silver mined in the world is a by-product, and mining in general is in a protracted downturn and retrenchment, supply is not looking so good.

It may not be tomorrow, but there’s a perfect storm brewing here, and we’ll be watching closely for the best times and opportunities for investing.