Silver Mania Begins

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Look at that. We log off for a few days, and absolute chaos breaks out in silver.

On Sunday December 28th, silver briefly traded over $83/oz here in the U.S. It’s currently trading at $72.67. That’s up sharply from $29 at the beginning of 2025.

What a crazy few weeks to end the year for precious metal bugs.

Today we’re going to look at what happened with silver, and explain why the bullish case is stronger than ever.

China’s Silver Chokehold

China is the second-largest silver miner behind Mexico. It accounts for about 13% of annual mine supply.

But China refines an estimated 45% of global silver production. They import silver ore and concentrate from all over the world, and use their massive refining capacity to turn it into 99.999% pure silver.

China is also the world’s largest consumer of silver. Their solar industry alone gobbles up nearly 15% of annual production.

And now the Chinese government is locking down their silver supply. As of January 1st, 2026, Chinese companies looking to export silver now require a license.

This shouldn’t really be a surprise. Earlier this year the U.S. government named silver a strategically critical metal.

Governments are finally waking up to the strategic importance of silver. I would not be surprised to see countries begin building strategic reserves of the metal. After all, it’s needed for most electronics, solar panels, electric vehicles, and even modern weapons.

China’s new silver restrictions could dramatically worsen current supply problems.

Reacting to news of China’s new silver rules, Elon Musk stated, “This is not good. Silver is needed in many industrial processes.”

Source: X

Tesla is a major consumer of silver due to their electric vehicle and solar panel businesses.

So now silver is yet another lever China can now use in the trade war. If they do utilize silver as a weapon, it’s going to boost volatility. But the volatility should be in our favor, as it could severely restrict supply.

Interestingly, silver has been trading higher in China than in the U.S. or U.K. It appears that Chinese industrial and investment demand remain incredibly strong.

China’s markets are closed until January 5th, so it will be very interesting to see what price silver opens trading at. For almost this entire move, China has led the way on price, and the COMEX and LBMA have followed with a delay.

China is now a huge player in silver markets, and this was not the case during either the 1970s or 2000s bull runs. Their industry was already the X-factor driving silver prices higher, but these new export restrictions could add serious fuel to the fire.

Investment Demand Set to Soar

Silver fever is just beginning to hit investors.

The move so far has been primarily driven by booming industrial demand. But now that the price of silver is soaring, investors are finally beginning to pay attention.

And once silver investment mania starts, we could see some absolutely crazy moves.

Everybody loves the idea of a short squeeze, and that could be what we’re starting to witness.

One version of the silver squeeze theory argues that big bullion banks are short massive quantities of silver. That they’ve been working with the government to suppress the price of precious metals, so that fiat currency looks good by comparison.

Proponents of this theory would argue that what we’re seeing today is the inevitable unraveling of the scheme. This is one of the more powerful narratives driving some silver owners to stack more physical metal. They want to help unravel the paper scheme by stacking bullion.

Is that what’s actually happening? Maybe, but we don’t have conclusive proof either way. What we do know is that plenty of people are short silver, and they’re getting squeezed out of their positions.

Besides, the fundamental story for silver is so good right now, we don’t even need the possibility of a price suppression scheme unraveling. The supply/demand scenario is all you need to justify higher prices for silver. The possibility of a grand conspiracy going belly up is just a possible bonus.

New Mines Can’t Meet Demand

People unfamiliar with how mining works may think “won’t they just mine more silver to meet soaring demand?”

New mines take at least 15-20 years from discovery to first production.

Besides, there are only a few dedicated silver mines in the world. 75% of silver is mined as a byproduct of other metals, primarily: copper, gold, zinc, and lead.

This bull market might speed up a handful of majority-silver projects. But most mines are already working at full capacity, or near it. You can’t just boost production overnight. It takes decades.

To get more silver tomorrow, you needed to start 20 years ago. And at this point the world’s easy metals have already been mined. Sure, there’s more out there, but it’s harder and more expensive to mine.

So this silver price increase won’t materially boost output anytime soon. It will increase recycling rates, but that will take a while to make a meaningful impact.

The outlook for silver and miners remains bright. And now that the price is rising, demand seems to be rising with it. Investors are jumping on board. Industrial users are stockpiling in case shortages get worse or prices keep rising.

With all that said, we are due for a pullback. It would be healthy if we corrected a bit more, or at least consolidated around the $70 level for a while.

But with potentially explosive catalysts out there, such as China’s new restrictions, the possibility of a short squeeze, and investors rushing in, who knows? We could spike to $100+, and I don’t want to miss that move when it happens. So I’ll continue to hold long-term.

We’ll have more silver coverage next week.

Have a nice weekend all.

P.S. Long-time readers may remember my article COMING SOON: Silver’s Mania Phase from March of 2025. Well, it’s finally here!

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