From Shanghai to Chicago: How Markets Lost Control of Silver:

Silver experienced an exceptional year in 2025, with triple-digit returns driven by a clear structural imbalance between supply and demand. But what is more dangerous – and less obvious to followers – is not the price itself, but the hidden infrastructure (Plumbing) of the global silver market.

To understand what is happening, one must distinguish between two levels of the market:

First: The Spot Market (Spot Market)
This is the physical silver market, where the price per ounce is set for immediate delivery. It is traded in major centers such as London, Dubai, and Shanghai. Here, we are talking about actual bars, which must meet strict standards regarding weight, purity, and dimensions, produced by accredited refineries, while exchanges ensure they conform to specifications.

Second: The Futures Market (Futures Market)
Primarily centered in Chicago via the COMEX exchange. In this market, silver is bought and sold for delivery at a future date and at a predetermined price. The main purpose here is hedging:
•Mining companies lock in their future selling prices.
•Technology, chip, and jewelry industries secure their input costs.
•Additionally, speculators bet on price discrepancies.

Under normal conditions, futures prices are higher than spot prices due to storage costs, financing, and time value. But what we are witnessing today is a complete reversal of this relationship.

The spot prices for silver in China have become higher than futures prices in Chicago. This is a very dangerous signal because it means the physical metal has become so scarce that the market is paying a premium to acquire it now, not later.

Even more critically, China, which controls about two-thirds of the world's silver refining capacity, has imposed – starting January 1, 2026 – a ban on silver exports. At the same time, available data indicates that physical silver stocks in London and Dubai are nearly depleted.

This creates a real dilemma:
If a jewelry company or an electronic chip manufacturer (like Samsung or TSMC) wants to receive their futures contracts with actual delivery rather than cash, there is not enough metal for delivery. Settling in dollars does not solve the problem because electronic chips are not made in dollars, but with silver.

This brings us to the most sensitive link: Bullion Banks (Bullion Banks).
These banks, which manage storage and oversee actual delivery, are mostly heavily short (Net Short) on silver. That is, they bet on the availability of the metal and on market stability. With this imbalance, these positions have become loss-making and dangerous.

There are indicators – not fully confirmed – that this gap in bullion bank balances is being indirectly contained through the repo market and supported by the Federal Reserve.

Some may think this is limited, because the silver market is relatively small (around $4 trillion), but the danger lies in the rapid inflation rate:
•Less than a trillion two years ago
•Less than 2 trillion a year ago
•Approximately 4 trillion today

The issue here is no longer a matter of industrial or investment metal, but a strategic choke point in a global financial system dominated by American banks, while China uses supply chains and critical materials as a geopolitical weapon.

In the context of an open trade war, the Taiwan issue, and a struggle for technological and financial dominance, the fundamental question is not:
Will China exploit this imbalance?
But: When, how, and at what level of escalation?

Silver may just be the beginning.$GT