This year, silver didn’t just perform well. It overwhelmed nearly every other asset and quietly climbed into the position of the third most valuable asset in the world. At the same time, a critical shift took place behind the scenes: China stopped selling silver freely to the world.
To understand why this matters, it’s necessary to zoom out and see silver through the wider lens of gold, money, and power.
Gold Restores Trust. Silver Controls Reality.
Gold and silver serve entirely different purposes in the global system.
Gold is about trust in money. It underpins reserve currencies and provides credibility when paper systems weaken. This is why China has spent decades building institutions like the Shanghai Gold Exchange, expanding what is often referred to as the gold corridor, and openly accumulating vast amounts of gold.
The message is clear: a monetary system can exist outside the dominance of the US dollar—one backed by physical gold, stored domestically or abroad, compliant with Basel III standards, and usable as collateral for sovereign lending and economic development.
Silver, however, is not about trust.
Silver is about control.
Silver is embedded in the infrastructure of modern civilization. It is essential for:
- Solar panels
- Electric vehicles
- Data centers
- Military electronics
- Satellites
- Advanced computing systems
It is one of the most efficient electrical conductors on Earth. Unlike gold, when silver becomes more expensive, industries cannot simply pause their demand. Production lines don’t stop. Governments don’t delay deployment. Silver must be used regardless of price.
This is why a long-standing theory exists that both gold and silver prices were deliberately restrained for decades—to keep essential inputs affordable while industrial systems expanded.
But that balance is breaking.
Over the next decade, silver demand is expected to surge due to AI, automation, robotics, electrification, and military technology. At the same time, China already dominates silver refining, processing, and now export oversight. That gives it decisive influence over who gets access—and who doesn’t.
This story is far larger than a single year of price performance.
How Silver Prices Are Discovered
Silver’s value is determined through global markets, primarily two:
- COMEX (United States)
- Shanghai (China)
COMEX is the dominant Western futures exchange. It is largely financialized, with most contracts settled in cash rather than physical delivery.
Inside COMEX-approved vaults, silver exists in two forms:
- Eligible silver: stored, not for sale
- Registered silver: available for delivery against futures contracts
The issue is scale. Registered silver at COMEX typically sits around 120–130 million ounces, while annual global demand exceeds 1.1 billion ounces. Less than 10% of yearly demand is available for delivery.
COMEX was never designed to supply physical silver at scale. It functions because most participants never request the metal itself.
Shanghai operates differently. Prices there reflect actual physical delivery inside China.
When Shanghai silver trades significantly above COMEX prices, it signals that guaranteed physical metal is becoming more valuable than paper contracts.
Recently, this gap exploded.
On December 24:
- Shanghai physical silver closed near $78 per ounce
- COMEX silver closed near $72 per ounce
A $6 gap is extraordinary. Historically, premiums between these markets rarely exceed $1–2. Normally, arbitrage closes such gaps almost instantly by moving metal from cheaper markets to more expensive ones.
When arbitrage fails, it means physical silver is not moving freely.
This divergence suggests tightening supply and growing difficulty in sourcing deliverable metal. Over time, Western vault inventories have been steadily declining, not increasing. Historically, when registered inventory tightens, physical prices force paper markets to reprice higher.
China’s Historical Memory of Silver
For centuries, China’s economy ran on silver, not gold.
Taxes, trade balances, and large transactions were settled by weight in silver. From the 1500s through the 1800s, enormous quantities of silver flowed into China. Access to Chinese production required a silver payment.
Silver stabilised prices, incomes, and taxes—until it didn’t.
In 1934, the United States passed the Silver Purchase Act, driving silver prices sharply higher. For a silver-based economy, this was catastrophic. Silver was pulled out of China, money drained from the system, and deflation set in.
Deflation initially feels beneficial, but it ultimately destroys demand. When people expect prices to fall, spending stops, investment collapses, hiring freezes, and economic activity eats itself.
In 1935, China abandoned the silver standard—not because silver failed, but because dependence on a material outside national control proved fatal.
That lesson was never forgotten.
China has now reclassified silver under dual-use export control rules. This means silver is officially recognized as both a civilian and strategic military material.
Exports are no longer automatic. They now require government approval.
This is a strategic masterstroke. An outright ban would provoke retaliation and diplomatic backlash. Regulation, however, appears neutral while granting total control. Licensing rules are written so narrowly that only select large players may qualify—and approvals remain discretionary.
China sits at the center of the global silver supply chain. Most silver is not mined directly. It is produced as a byproduct of mining copper, lead, and zinc, then refined—often inside China.
Even silver mined in Mexico or Australia frequently passes through Chinese infrastructure before becoming usable.
Starting January 1, 2026, China effectively decides whether that silver leaves the country.
A Familiar Pattern: Rare Earths
This strategy is not new.
China applied the same approach to rare earth elements over the past decade. Today, it controls roughly 80–90% of global rare earth refining. When exports were restricted, prices surged, and global governments panicked.
Only then did Western nations realize that rebuilding supply chains would take years—sometimes decades.
Silver is now following the same path, with one crucial difference: silver is not niche. It is everywhere.
Approximately 70–80% of silver production comes as a byproduct of other mining activities. Even if silver prices double, production does not automatically increase unless base metal mining expands.
This creates inelastic supply.
Elastic goods reduce demand when prices rise. Inelastic goods do not. Silver sits firmly in the inelastic category. Factories cannot wait. Governments cannot pause. Technology cannot function without it.
What's Next
Silver’s history is deceptive. It often does nothing for years—sometimes decades—then moves violently.
In past cycles:
- It doubled multiple times in the late 1960s and 1970s
- It surged from roughly $6 to over $50 between 1979 and 1980
- Long dormant periods followed
Silver moves fast because it is essential. When shortages appear, price adjusts abruptly. Speculation then amplifies the move. Eventually, speculative capital exits, prices correct sharply, and the cycle resets.
Where the current cycle stands is unknowable. What is clear is that price alone is not the real story.
This Is Not About Silver
This is about money, power, industry, and leverage.
Gold rebuilds trust in monetary systems.
Silver and rare earths control the physical foundations of technology, energy, and defense.
By controlling processing and export, influence shifts from markets to gatekeepers. Those who control access decide who builds, who waits, and who must seek funding.
That is leverage.
In a world moving toward multipolarity—where no single nation controls the reserve currency—leverage becomes the most valuable asset of all. Silver is simply the next visible domino in that transformation.
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