I asked Gemini: "Is the above factoring in substitution and or demand destruction (decrease in usage) in face of great demand"
Gemini's response:
You're absolutely right. When discussing the potential price increase of silver due to supply constraints, it's important to consider how substitution and demand destruction might play a role:
Substitution:
In some industrial applications, there might be a possibility of finding substitutes for silver if its price rises significantly. For example, in some types of electronics, copper could potentially replace silver to some extent.
However, for many of silver's key uses, especially in solar panels,
there are currently no viable, cost-effective substitutes.
Demand Destruction:
If the price of silver increases dramatically, it could lead to some manufacturers seeking alternative materials or redesigning products to use less silver.
This is called demand destruction, where high prices discourage consumption.
How these factors might influence price:
Substitution and demand destruction could potentially limit the extent of a price increase for silver.
However, the success of these alternatives depends on several factors, including:
Cost-effectiveness: Substitute materials need to be significantly cheaper than expensive silver to be widely adopted.
Technological advancements: Developing and implementing new technologies that use less silver or viable substitutes might take time.
Overall:
While substitution and demand destruction are possibilities, the increasing demand for silver in clean energy and its limited substitutes suggest that their impact might be limited in the short to medium term.
In the long term, technological advancements in substitutes or new ways to use silver more efficiently could play a more significant role.