Tesla CEO Elon Musk has expressed his concerns over rising silver prices as China’s new export rules deadlines nears. In a post on microblogging platform X (formerly Twitter), Musk wrote “This is not good. Silver is needed in many industrial processes.” He was responding to a post that depicted ‘exploding’ silver prices due to “severe global supply shortage.” Prices of the white metal have increased sharply in recent times to a record high of $78.65 on Friday, December 26. A post by X user named ‘Bull Theory’ tried explaining the soaring prices. The post said:“Silver prices are exploding due to a severe global supply shortage. The physical market can no longer meet soaring demand. Here is what is actually going on 1. China is changing the rules.Starting January 1, 2026, China will restrict silver exports.To export silver, companies will now need government licenses.Only large, state approved firms qualify:– At least 80 tonnes of annual production– Around $30 million in credit linesThis effectively blocks small and mid size exporters. China controls roughly 60–70% of global silver supply. When China tightens exports, global supply drops immediately. This is the same tactics China used with rare earth metals. 2. The silver market was already short supply.Silver has been in a structural deficit for 5 straight years. That means demand is higher than supply every single year.For 2025:– Global demand: 1.24 billion ounces– Global supply: 1.01 billion ouncesThat is a gap of 100–250 million ounces. And this gap is expected to get worse after China’s export limits.Mining supply is not growing:Silver mining is mostly a by product of copper and zinc mining.New mines take 10+ years to build, Ore quality is falling, Recycling is not enough to fill the gap.There is no quick fix here.3. Physical silver inventories are collapsing.This is where it gets serious.– COMEX inventories are down 70% since 2020– London vaults are down 40%– Shanghai inventories are at 10-year lowsAt current demand, some regions hold only 30-45 days of usable silver.This is why physical premiums are exploding.In Shanghai:– Physical silver trades at $80+/oz– COMEX prices are much lowerThis price gap means buyers are paying extra just to get real silver.4. Paper silver is completely disconnected from reality.There is an extreme imbalance between paper silver and real silver.The paper to physical ratio is around 356:1.That means:– For every 1 ounce of real silver– There are hundreds of paper claimsIf even a small percentage of buyers ask for real delivery, the system breaks.Markets understand this. That is why price moves are becoming vertical.5. Industrial demand keeps rising.Silver is not just a safe haven metal.It is critical for:– Solar panels– Electric vehicles– Electronics– Medical devicesIndustrial use now makes up 50-60% of total silver demand.There is no substitute for silver in many of these uses.Banks and institutions are reacting to:– Supply limits– Physical shortages– Paper market riskSilver is not rallying because of fear.It is rallying because a real supply squeeze is playing out in real time.”
China’s new Silver export rules from January 1, 2026
Starting January 1, 2026, China will require companies exporting Silver to obtain licenses from its Ministry of Commerce (Mofcom). The move, according to experts, could further disrupt the global supply chain.
