Something happened recently with regards to silver in China. China implemented a new export licensing system for refined silver.
I didn’t pay attention to this at first. Seemed like bureaucratic noise. But then I realized what it actually means.
China controls 60 to 70 percent of global refined silver supply. Not because China mines all that silver. China mines only 13 percent of global silver ore. But China’s refining industry is massive. They take silver concentrate from around the world, refine it, and export it globally.
Now, with this new licensing system, China is restricting refined silver exports to state-approved producers only. And the exports are expected to drop by 30 percent.
That’s 120 to 150 million ounces less silver going to global markets per year.
Let me put that in context. The current global deficit is 230 million ounces per year. With this new restriction, the deficit could jump to 280 to 300 million ounces per year. That’s the biggest supply shock since 2008.
Why did China do this? Three reasons I can think of:
First, they want to prioritize their own solar panel manufacturers. China is racing to dominate global solar manufacturing. By keeping silver at home, they can produce solar panels cheaper than competitors. That’s competitive advantage through supply chain control.
Second, it’s geopolitical leverage. By controlling refined silver, China controls manufacturing costs for EVs, solar panels, and electronics globally. That’s soft power.
Third, it’s a strategic reserve. China might be hedging against a weaker US dollar in the future. Precious metals are a store of value.
Whatever the reason, the effect is clear. Western manufacturers will suddenly scramble for silver in January 2026. Prices will spike. Refineries outside of China will become bottlenecks.
And that’s before new supply can come online. We’re talking 2 to 3 years before alternative refining capacity gets built.
So what happens? Silver prices probably stay elevated through 2026. Maybe higher in Q1 when everyone front-loads their purchases.
London and New York silver inventories, already tight, will get tighter.
Industries that depend on silver will face cost pressures.
And India, dependent on global refined silver imports, will see its premium widen even further.
This policy change is small in appearance but massive in impact. Because supply chains don’t adjust overnight.