Silver Could Be The Biggest Winner From SpaceX's IPO: Experts Warn Supplies May Run Out In 3 Years

As SpaceX nears its $75 billion IPO at a $1.7 trillion valuation, market experts believe that the company's goal to develop and deploy orbital AI satellites and data centres in space—powered by solar arrays—amid the broader buildout of AI infrastructure is highly likely to intensify the demand for silver.

SpaceX had described early satellites generating 100 kilowatts of compute power, and from there onwards, the company plans to scale across a constellation in Sun-synchronous orbit with near-constant solar exposure.

In short, SpaceX's IPO capital funds orbital data centres and Starlink expansion, which require solar capacity, and in turn, need huge quantities of silver.

Running Out of Silver Inventory

Although the iShares Silver Trust (SLV), which is the top physical silver-backed exchange-traded fund (ETF), fell 19.1% over the past month as investors absorbed a sharp drawdown, the ETF is still up 76% over the past year and has gained more than 127% over the last five years.

Borneite Capital's Dan Dreyfus recently said on the All-In Podcast that the world could run out of above-ground silver in a few years amid surging demand for industrial applications.

Dreyfus said that the world consumes 1.2 billion ounces of silver every year, against a supply of 1 billion ounces annually. The 200 million-ounce annual deficit, with only 600 million ounces of above-ground inventory left, implies that silver inventory will run out in three years.

Structural deficit and declining silver inventories offer a favourable setup for commodity bulls. For instance, Citadel opened a new position in the SLV ETF in Q1, while multiple analysts have highlighted the gold-to-silver ratio of 63:1, which is way higher than the 100-year average of 40:1.

Precious Metals Making a Comeback?

Precious metals like gold and silver have faced massive selling pressure since the onset of the Middle East war amid profit booking by traders, the potential for higher interest rates, rising inflation, and oil prices.

While gold's 'safe haven' reputation was tested in recent weeks, Indosuez Wealth Management's Francis Tan recently told CNBC that 'gold as a safe haven certainly has played its part... A peace deal would suggest those tailwinds ease off and we are seeing that just now. It's as if the handbrake has been released from gold and silver.'

Elsewhere, BNP Paribas Fortis' Philippe Gijsels views the selling pressure on gold and silver as a 'consolidation phase', and factors like central banks purchasing gold, higher US debt, and currency debasement are expected to drive up gold prices.

Lastly, Gijsels opined that the recent downturn in gold and silver prices is a 'pause in what will live up to be the strongest and longest bull market in gold and silver in history,' and expects the 'secular bull market in gold and silver to resume' with prices headed towards all-time highs potentially in 2026.

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