Silver now finds itself at the center of a geopolitical wrestling match over critical elements.

In what is clearly an effort to control the market, China recently announced export controls on silver. This could exacerbate the global supply shortage, already creating a significant silver squeeze.

According to the policy that took effect on January 1, only large state-authorized and approved companies with an annual silver production capacity of 80 tons and a credit line exceeding $30 million can export silver. According to analysts, the rules will lock hundreds of small and medium-sized exporters out of the system. These smaller companies are key suppliers to industrial users and silver refineries worldwide.

The government recently published a list of 44 companies approved to export silver under the new rules. According to CNBC, a Chinese state news source cited an anonymous industry insider who stated that the policy elevates silver from an ordinary commodity to a strategic material, placing export controls on the same regulatory level as rare earth metals.

The United States also recognizes the growing importance of silver. The U.S. Geological Survey recently designated silver as a critical mineral. The USGS critical minerals list was established in 2017 and guides federal strategy, investments, and mining permit decisions.

Along with silver, the Chinese government has imposed export restrictions on tungsten and antimony, critical elements in defense technologies.

Export controls are a standard move in China’s geopolitical playbook. The Chinese government has used similar rules to control the market for other rare earth metals. Analyst Faysal Amin stated that China uses export controls “to ensure national industrial advantage and global pricing power.”

China ranks second in global silver mine production, but the Chinese dominate the silver market due to their massive refining capacity. The country controls 60 to 70% of the world’s refined silver supply.

According to the London Bullion Market Association, China hosts 27 accredited silver refineries. The second-highest number of refineries is located in Japan, with only 13.

Silver Squeeze

LiveMint.com stated that China’s enormous refining capacity effectively makes the country “the gatekeeper of refined silver supply.”

“The pattern is simple: China imports silver ore and base metal concentrates, refines them domestically, and exports the finished product.”

China exported 4,600 tons of silver in the first 11 months of 2025. Imports amounted to only 220 tons.

In an editorial published by MarketWatch, R360 founder Charlie Garcia put it bluntly.

“China just weaponized silver. And they did it while Americans were busy debating whether bitcoin is real money.”

Garcia explains how this is a common play from the Chinese playbook, one they have successfully executed against rare earth metals.

“In 2010, Beijing began ‘licensing’ rare earth exports. Not banning them, mind you. Just requiring paperwork. Approvals. Quotas that somehow never quite met demand. The effect was surgical; when prices surged 4,500%, Western manufacturers discovered they couldn’t build smartphones or missiles without Chinese permission—and a generation of supply chain executives learned Mandarin the hard way. The rare earth squeeze wasn’t dramatic. It was bureaucratic. Death by a thousand forms filed in triplicate.”

The West escaped the rare earth noose by ramping up extraction of these metals. But that’s easier said than done when it comes to silver. Even with higher prices, analysts say it will take years before silver production rises to meet demand.

Globally, mine production has declined since peaking in 2016.

Metals Focus predicts that while we will see record silver prices over the next five years, “mine supply growth is likely to remain modest, with minimal increases globally.”

Why won’t silver production increase to meet demand and take advantage of these higher prices?

Metals Focus attributes the price inelasticity to the fact that more than half of silver is mined as a byproduct of base metal operations.

“While silver can represent a significant revenue stream, the economic and production plans of these mines are primarily driven by copper, lead, and zinc markets. Consequently, even significant increases in silver prices are unlikely to influence production plans that depend on other metals.”

Approximately 28% of silver supply comes from primary silver mines, where production is more closely tied to price. But silver mines face their own challenges, including declining ore grades and rapidly rising mining costs.

U.S. silver mine production increased by approximately 6% in 2024, reaching about 1,100 tons. However, U.S. mine production has also remained flat in recent years.

Flat mine production is exacerbating tight supplies.

Silver demand has exceeded supply for four consecutive years. Last year, the market’s structural deficit amounted to 148.9 million ounces. This brought the four-year market deficit to 678 million ounces, the equivalent of 10 months of mine supply in 2024.

This year, the Silver Institute forecasts a fifth consecutive supply deficit.

Garcia emphasized that it takes 10 to 20 years before an ounce of metal is extracted from a newly discovered silver deposit.

“The supply cavalry isn’t coming. It’s geologically stuck in traffic.”

Garcia also targeted the hope that copper could replace silver in critical technological applications, such as solar energy. While engineers have demonstrated that copper can substitute for silver in solar panels, that doesn’t mean you’ll see copper-infused solar farms tomorrow.

“Here’s what the lab results don’t tell you: converting a single solar cell factory to copper takes 18 months. There are 300 such factories worldwide. Maximum parallel conversion capacity is about 60 factories per year. Do the math. That’s at least four years to get halfway there, assuming unlimited capital and perfect execution. Solar manufacturers aren’t stupid. They’ve absorbed silver’s 180% price increase all year. They keep buying because they have no choice.”

Garcia estimates that silver will need to rise to $134 per ounce before we see significant demand destruction in the solar sector.

Why is China trying to corner the silver market? Garcia said it’s a matter of economic dominance.

“Beijing isn’t restricting exports because the government is worried about speculation. China is restricting exports because it needs the silver and has figured out something Washington hasn’t. The clean energy transition runs on metals, and whoever controls the metals controls the transition.”

And don’t forget that the defense industry is also heavily dependent on silver. There are no precise figures on the amount of silver used in defense applications due to the confidential nature of the sector. However, analysts say it is significant.

Garcia said the import restrictions send a message to the West.

“If you want to build the energy future, you’ll have to negotiate with Beijing. Maybe your silver shipment will be approved. Maybe there will be delays. Maybe you’ll suddenly find yourself interested in Chinese joint ventures and technology transfers. Funny how that works. … China just told us something important, and it wasn’t complicated. Silver is no longer a commodity. It’s a strategic resource in a resource war that most Americans don’t know is being fought.”

Given the evolving dynamics, Garcia stated that it might not be a bad idea to hold some physical silver.

“There’s an argument for holding the metal in your possession. No counterparty risk. No margin calls. Just silver, sitting there, quietly appreciating while Beijing bureaucrats shuffle export applications into the ‘pending’ pile.”