The AI Revolution
Back in 2023, Time Magazine stated that, “we are about to see the greatest redistribution of power in history.”1https://time.com/6310115/ai-revolution-reshape-the-world/ Indeed, artificial intelligence is changing everything — and its impact is being felt in healthcare, education, e-commerce, finance, transportation, agriculture, and countless other industries. It includes precious metals and AI.
According to the University of Cincinnati, since the release of OpenAI’s ChatGPT and other AI applications, the automation of competitive tasks and use of algorithms to mimic human intelligence has delivered noticeable benefits including:
- Enhanced healthcare
- Boosted economic growth
- Climate change mitigation
- Advanced transportation
- Customer service excellence
- Scientific discovery
- Enhanced financial services
- Improved agriculture
- Enhanced cybersecurity2https://online.uc.edu/blog/artificial-intelligence-ai-benefits
The pace of change has been nothing short of dramatic. From emails to search engines, from smart cars to smart homes, from autocorrect to voice recognition — artificial intelligence is everywhere.
And all this increased efficiency, added convenience, and improved productivity would not be possible without precious metals. According to the World Gold Council, “AI systems rely heavily on advanced hardware, including processors, memory chips and sensors, all of which utilize gold.”3https://www.gold.org/goldhub/gold-focus/2024/11/you-asked-we-answered-how-important-ai-gold-demand According to Barron’s, silver is also used in the “powerful semiconductor chips needed for artificial intelligence.”4https://www.barrons.com/articles/silver-gold-copper-price-stock-market-ai-f5690f28
Gold and High-Performance Computing
Gold is generally considered to be a soft and malleable metal, but it also has one of the highest densities of all known metals. It is a good conductor of heat and electricity but also chemically inert and therefore resists corrosion. Its lustrous appearance gives it visual beauty making it one of the most coveted metals that human civilization has even known.
In terms of the precious metals and AI revolution, gold is critical for AI-driven technology and according to the World Gold Council, the hardware systems, graphic and neural processors, and memory chips that support artificial intelligence, all utilize gold and this will likely result in increased demand.
“AI-enabled devices, such as smartphones and autonomous vehicles, alongside a corresponding growth in data centres, has created an exponential rise in the need for highly efficient and reliable electronic components. Gold’s superior conductivity ensures that data can be processed and transmitted at high speed with minimal energy loss. Furthermore, gold’s resistance to corrosion ensures component longevity and durability – critical for continuous and intensive AI applications.”5https://www.gold.org/goldhub/gold-focus/2024/11/you-asked-we-answered-how-important-ai-gold-demand
In Q3 of 2024, gold demand in technical applications was 83 tons, a 7% increase year- over-year. Its use in electronics was 69 tons, a 9% increase year-over-year. According to State Street Advisors, the rising demand for gold in the technology sector was “primarily due to high-end chips increasingly used for AI applications and high-performance computing.” 6https://www.ssga.com/us/en/intermediary/insights/gold-nuggets-will-ai-be-a-boon-for-gold-demand
Switches, Sensors, Smart Devices and Silver
Silver is also a relatively soft metal with high density and a radiant, white metallic appearance — particularly when polished. It is a highly reflective metal and among the most conductive known to man since it efficiently transmits both electricity and heat. This makes it an essential component of both the technology and the industrial sector. Soaring demand for AI technology and “smart” applications, in particular, will likely to have a major impact on the silver market as outlined by the Silver Institute.
“The huge increase in energy demand from AI devices will also result in a boost for the white metal. Compared to traditional data centers, AI-hosting facilities require immense amounts of power when executing algorithms and consume additional energy to keep cool. The International Energy Agency (IEA) recently forecast that data centers’ total electricity consumption could double by 2026 … Existing power grids will thus need to expand and upgrade to ensure sufficient capacity. As a result, silver demand will benefit from the resultant lift in components used in power distribution and transmission systems, such as electrical contacts in switches, transformers, relays, and capacitors. Growth in energy offtake will also propel upward momentum for the silver-reliant solar industry.”7https://www.silverinstitute.org/wp-content/uploads/2024/04/World-Silver-Survey-2024.pdf
So silver is not only a monetary metal but also a tech metal subject to increasing demand from AI, automation, and the heavy adoption of smart devices.
Silver’s practical AI uses are abundant as “special gloves are now available for use with touchscreen phones, created from nylon fibres woven with silver.”8https://www.physicalgold.com/insights/the-physical-properties-of-silver
Most notably, silver demand for solar power has climbed sharply over the past five years, soaring from 74.9 million ounces in 2019 to an estimated 232 million ounces by the end of 2024, representing an increase of over 200%. AI is now being used to dramatically improve solar energy output.
The Early Stages of a Behemoth
Artificial Intelligence has the potential to not only radically alter human experience but to completely transform the world economy.
“AI could contribute up to $15.7 trillion to the global economy in 2030, more than the current output of China and India combined. Of this, $6.6 trillion is likely to come from increased productivity and $9.1 trillion is likely to come from consumption-side effects. While some markets, sectors and individual businesses are more advanced than others, AI is still at a very early stage of development overall.”9https://www.pwc.com/gx/en/issues/artificial-intelligence/publications/artificial-intelligence-study.html
Early or not, Artificial Intelligence is transforming nearly every aspect of our lives — from the mundane to the highly complex. It can streamline business applications, increase productivity, improve written communication, automate repetitive tasks, and even enhance decision making and perform cognitive functions replicating human reasoning and logic.
McKinsey & Company calls the integration between humans and machines, “a match made in productivity heaven.”
“Our species wouldn’t have gotten very far without our mechanized workhorses. From the wheel that revolutionized agriculture to the screw that held together increasingly complex construction projects to the robot-enabled assembly lines of today, machines have made life as we know it possible.”10https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-ai
Increasingly widespread adoption of AI will likely transform manufacturing, marketing, communication, cybersecurity, finance and even space exploration and entertainment. According to TechTarget, AI will dramatically change the speed of life and in the next five years it will see rapid growth as it revolutionizes business, industry, and everyday tasks.
“The effects of this machine renaissance have permeated society: Voice recognition devices such as Alexa, recommendation engines like those used by Netflix to suggest which movie you should watch next based on your viewing history, and the modest steps taken by driverless cars and other autonomous vehicles are emblematic of a rudimentary stage of 21st century AI. ChatGPT 4, Dall-E, Midjourney and other contemporary generative AI systems are currently disrupting most business sectors. But the next five years of AI development will likely lead to major societal changes that go well beyond what we’ve seen to date.”11https://www.techtarget.com/searchenterpriseai/tip/The-future-of-AI-What-to-expect-in-the-next-5-years
This rapid growth trajectory will significantly increase demand for gold and silver which have proven to be indispensable in supporting the computing processes and energy demands of AI technologies and capabilities. And increased demand almost always translates to higher prices.
Bitcoin News recently asked 11 AI chatbots including Google’s Gemini, Mistral AI’s Le Chat, Claude’s 3.5, Sonnet, and OpenAI’s ChatGPT 4.0 which all require gold and silver to compute — where they think gold and silver prices will be by the end of the year. The Chatbots were remarkably consistent about the upward momentum for both metals with only slight price variations.12https://news.bitcoin.com/11-ai-chatbots-take-on-gold-and-silver-price-predictions-for-2024
According to Grand View research, the global AI market is set to reach $1.81 trillion by 2030 and will grow by over 13 times in the next decade.13https://explodingtopics.com/blog/ai-statistics This rapid acceleration will continue to fuel demand for both gold and silver well into the foreseeable future.
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1 https://time.com/6310115/ai-revolution-reshape-the-world
2 https://online.uc.edu/blog/artificial-intelligence-ai-benefits
3 https://www.gold.org/goldhub/gold-focus/2024/11/you-asked-we-answered-how-important-ai-gold-demand
4 https://www.barrons.com/articles/silver-gold-copper-price-stock-market-ai-f5690f28
5 https://www.gold.org/goldhub/gold-focus/2024/11/you-asked-we-answered-how-important-ai-gold-demand
6 https://www.ssga.com/us/en/intermediary/insights/gold-nuggets-will-ai-be-a-boon-for-gold-demand
7 https://www.silverinstitute.org/wp-content/uploads/2024/04/World-Silver-Survey-2024.pdf
8 https://www.physicalgold.com/insights/the-physical-properties-of-silver
10 https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-ai
12 https://news.bitcoin.com/11-ai-chatbots-take-on-gold-and-silver-price-predictions-for-2024
13 https://explodingtopics.com/blog/ai-statistics
