Silver Mania Begins
Just a few days away, and silver has erupted into complete chaos.
On Sunday, December 28th, silver briefly surged beyond $83/oz in the U.S. It’s currently trading around $72.67, a significant jump from $29 at the start of 2025.
What a wild way to close out the year for precious metal enthusiasts.
Today we’ll explore the developments in silver and outline why the bullish outlook has never been stronger.
China’s Silver Chokehold
China stands as the world’s second-largest silver miner after Mexico, contributing about 13% of global mine supply annually.
However, it processes nearly 45% of the world’s silver output by importing ore and concentrates worldwide, converting them into 99.999% pure silver at its vast refining facilities.
China is also the top consumer of silver globally, with its solar sector alone consuming roughly 15% of the annual production.
Now, the Chinese government is tightening control over silver exports. Starting January 1st, 2026, companies in China must obtain a license to export silver.
This move aligns with earlier U.S. declarations recognizing silver as a strategically vital metal.
Governments are awakening to silver’s strategic value, and we may soon see nations building strategic reserves, given its crucial role in electronics, solar panels, electric vehicles, and modern weaponry.
China’s new export curbs could significantly exacerbate ongoing supply issues.
Responding to this news, Elon Musk remarked, “This is not good. Silver is needed in many industrial processes.”
Source: X
Tesla is a significant silver user, thanks to its electric vehicles and solar energy sectors.
Silver has become another strategic advantage China can wield amid trade tensions. Should they deploy it, expect increased market volatility, which could ultimately benefit those positioned for tighter supplies.
Interestingly, silver prices in China have been higher than in the U.S. or U.K., reflecting robust demand from Chinese industry and investors alike.
China’s markets remain closed until January 5th, making the silver opening price a key indicator. Throughout most of this rally, China has set the tone, with COMEX and LBMA prices lagging behind.
In the past, China was not a major player during the 1970s or 2000s silver rallies, but today its industrial might is driving prices upward—and the new export restrictions could intensify this trend.
Investment Demand Set to Soar
Investor enthusiasm for silver is just beginning to heat up.
So far, industrial demand has been the main driver of this surge, but climbing prices are finally attracting investor attention.
When silver investment mania takes hold, the market could experience some truly dramatic movements.
The idea of a short squeeze is especially popular, and it seems we may be witnessing the start of one.
One version suggests that major bullion banks are heavily short silver and have collaborated with governments to keep precious metal prices suppressed, painting fiat currencies in a better light.
Advocates of this notion believe the current price rally signals the breakdown of this suppression. This belief motivates many silver holders to accumulate physical metal, aiming to undermine the supposed paper manipulation.
Is this really unfolding? It’s uncertain—we lack definitive proof. What is clear is that numerous traders are short silver and currently being forced to exit their positions.
Regardless, silver’s fundamental outlook is compelling enough to justify rising prices without relying on conspiracy theories. The imbalance between supply and demand alone supports a bullish case. The collapse of any price suppression scheme would simply be an added bonus.
New Mines Can’t Meet Demand
Those unfamiliar might wonder, “Can’t mining operations just increase silver production to keep up with rising demand?”
In reality, developing new mines takes 15 to 20 years from discovery to output.
Additionally, only a small fraction of silver is extracted from dedicated silver mines. About 75% of silver production comes as a byproduct of mining other metals like copper, gold, zinc, and lead.
This bull market might accelerate some majority-silver initiatives, but most operations are already near full capacity. Producing more silver overnight isn’t feasible; such expansions require decades to accomplish.
To boost silver output immediately, development should have begun two decades ago. Moreover, the easiest-to-extract metals have been largely depleted, leaving only tougher, costlier sources.
Therefore, the current price rally won’t translate into significant new supply soon, though recycling may increase gradually over time.
Silver and mining companies have a promising future. As prices climb, demand is rising correspondingly. Investors are entering the market, while industrial users are stockpiling amid fears of tightening availability and escalating costs.
That said, a price pullback is likely. A healthy correction or consolidation near $70 would be expected.
Nonetheless, with potential catalysts like China’s export limits, a short squeeze, and investor interest, the market could surge past $100. I don’t intend to miss out on such a move, so I’m holding for the long haul.
More updates on silver will follow next week.
Have a great weekend, everyone.
P.S. Regular readers might recall my March 2025 article COMING SOON: Silver’s Mania Phase. Well, it’s finally arrived!
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