Is physical silver a sustainable investment?

Mining is not known as a sustainable sector, but can silver be considered sustainable when you look at its usage? You’ll read about it in this knowledge base article.

A rough start

Physical silver starts with mining, and this is generally not a sustainable process. Mining usually takes place in countries with less strict environmental regulations than in Europe, and the extraction of silver or other precious metals can lead to water pollution and soil contamination.

There are ways to extract gold and silver more sustainably, but the initiatives for this remain small-scale. However, major regulatory bodies like the LBMA (London Bullion Market Association) are actively working on this through, for example, their Responsible Sourcing Programme. Individual precious metal producers such as Umicore are also working on sustainability.

Industrial applications

So, silver extraction is not very sustainable—but what about other aspects beyond mining? For example, silver is an important component in industries needed for the energy transition, such as wind turbines, solar panels, and batteries.

If we want to achieve the energy transition and move toward greener solutions, we essentially cannot avoid (polluting) mining of rare metals. This means silver is not directly sustainable, but it is part of a more sustainable economy.

Economic impact

Silver can therefore contribute to the energy transition, and it is also widely used in medical equipment. As an investment product or in jewelry, the environmental impact of silver is relatively limited: it has a long lifespan and is not a consumable product like food or energy.

It can therefore be stated that although silver mining is not sustainable, the economic impact of silver as jewelry, or as a raw material for the energy transition and medical industry, is not highly burdensome.

Recycling

Because of its high value and excellent durability, recycling silver is very attractive. This means silver contributes to better and more intensive recycling of products.
Recycled silver is also an increasingly important source of new silver, alongside mined sources. As a result, the silver extraction process itself is also becoming more sustainable. A major producer like Umicore has been actively investing in recycling for years.

Is investment silver sustainable?

Whether silver is a sustainable investment depends on what you compare it to. What is clear is that silver derives its value and return mainly from scarcity, whereas with stocks there generally needs to be revenue and profit growth.

Investing in an electric car manufacturer may sound green, but even producing a sustainable electric car still has a significant environmental footprint. Silver is therefore likely less harmful than many stocks, and a relatively green and socially responsible option to diversify your investment portfolio.

Curious about purchasing physical silver? View our product range here of competetively priced, LBMA certified silver.

Disclaimer: The Silver Mountain does not provide investment advice and this article should not be considered as such. Past performance is no guarantee of future results.