China announced that starting January 1, 2026, exports of certain critical minerals (including silver, antimony, and others) will require government licenses. This isn't an outright ban, but it gives Beijing a chokepoint to control flows.
- Western markets must catch up because physical supply shrinks
- If China controls ~2/3 of refined silver output and restricts exports, Western industrial users (solar manufacturers, electronics, EVs) face genuine shortages
- COMEX can't settle contracts with paper forever—eventually physical delivery demands force price discovery higher
- Result: Western spot price climbs toward Chinese prices
- If Western paper markets refuse to reprice (manipulation, institutional inertia), you could see:
- "Official" COMEX price: Lower, increasingly disconnected from reality
- Physical/industrial price: Higher, what manufacturers actually pay
- This already happens informally—dealers charge premiums over spot
- Risk: If the gap grows too large, trust in COMEX pricing collapses, triggering a crisis
- Western industries scramble for alternatives or reduce silver use
- Recycling ramps up
- This dampens price increases but takes years to implement
- Silver's unique properties (best electrical/thermal conductor) make substitution difficult for many applications
A combination: Western prices rise significantly but possibly not to full Chinese parity. A persistent premium in China reflects their industrial urgency + strategic hoarding. The spread may narrow but not fully close unless there's a full-blown supply crisis forcing COMEX repricing.
Ratios strip away currency noise and show you the relative value between two assets. Here's the intuition:
What it means: How many ounces of silver does it take to buy 1 ounce of gold?
| GSR Value | Interpretation |
|---|---|
| High (80-100+) | Silver is cheap relative to gold |
| Low (30-50) | Silver is expensive relative to gold |
| Current: ~57 | Moving toward silver being "fairly valued" or even expensive |
Example:
- Gold at $4,531/oz, Silver at $79/oz
- Ratio = 4531 ÷ 79 = ~57
- Meaning: You need 57 oz of silver to equal the value of 1 oz of gold
Why it matters:
- Historically, the ratio averages 40-60 over centuries
- In bull markets, silver typically outperforms gold (ratio falls)
- At the 1980 peak, ratio hit ~15 (silver massively outperformed)
- In 2011, it got to ~32
- If ratio falls from 57 → 30, silver doubles relative to gold even if gold stays flat
Trading implication: Many stackers swap gold for silver when the ratio is high (80+), then swap silver back to gold when it's low (30-40). This increases total ounces over cycles.
What it means: How many ounces of platinum to buy 1 ounce of gold?
| Ratio Value | Interpretation |
|---|---|
| Above 1 | Gold is more expensive than platinum (unusual historically) |
| Below 1 | Platinum is more expensive than gold (historical norm) |
| Current: ~1.85 | Platinum still "cheap" relative to gold, but catching up fast |
Historical context:
- Platinum was traditionally more expensive than gold (rarer, harder to mine)
- From 1987-2011, platinum usually traded at 1.5-2x gold's price
- Post-2011, platinum collapsed due to diesel decline, South African mining issues
- April 2025: Ratio hit 3.5 (platinum extremely cheap vs gold)
- Now: ~1.85 (platinum rallying hard)
Why it matters:
- If you believe platinum will revert to historical norms (trading at or above gold), buying at ratio 1.85+ offers significant upside
- Platinum has industrial uses (catalytic converters, hydrogen fuel cells) that could drive demand
The core insight: Fiat currency is the measuring stick, but the stick keeps shrinking (inflation).
| Year | Gold Price | Silver Price | GSR |
|---|---|---|---|
| 1980 | $850 | $50 | 17 |
| 2011 | $1,900 | $50 | 38 |
| 2025 | $4,531 | $79 | 57 |
Notice: Silver hit $50 in both 1980 AND 2011, but the ratio was completely different. The ratio tells you how silver performed relative to gold—not just how the dollar devalued.
For wealth preservation: You want to hold assets that gain purchasing power relative to other assets, not just nominal dollar gains that might just keep pace with inflation.
1a. Could silver become a tool in US-China trade wars like rare earths? Absolutely. China already restricted rare earth exports to Japan (2010) and gallium/germanium to the West (2023). Silver follows the same playbook—control critical supply chains, then use them as leverage in trade negotiations or sanctions retaliation.
1b. What industries would be most vulnerable to a Chinese silver embargo? Solar panel manufacturing (silver paste for cells), electronics (soldering, contacts), and medical devices. The US has minimal domestic refining capacity, so a sudden cutoff would create months of scrambling for alternative suppliers.
1c. Is the US or Europe doing anything to build independent refining capacity? Very little so far. Some pilot projects exist, but building refining infrastructure takes 3-5+ years and massive capital. The Inflation Reduction Act incentivizes domestic mining but doesn't address refining. This is a strategic vulnerability.
2a. Do ratios mean-revert reliably, or is that just pattern-matching? Ratios do tend to oscillate within ranges, but "when" they revert is unpredictable. The GSR stayed above 70 for most of 2018-2020—years longer than many expected. Mean reversion is directionally useful but terrible for timing.
2b. Has anything structurally changed that might break historical ratio patterns? Yes—industrial demand composition has shifted. Silver's industrial use (now ~55% of demand) is much higher than in 1980 (mostly monetary). Platinum's diesel dependence is fading. These structural changes could create "new normal" ratio ranges.
2c. How do ratios behave during financial crises vs. normal markets? During crises, ratios become extremely volatile. In March 2020, the GSR spiked to 125 (panic gold buying). Then it crashed to 65 within months. Crises create ratio extremes—which are opportunities if you have liquidity and conviction.
3a. What's the case for holding silver over gold right now? Silver offers more upside potential (ratio compression) and is more accessible for smaller investors. If the GSR falls from 57 to 30, silver outperforms gold 2:1. However, silver is more volatile—10-20% swings are common.
3b. Is platinum a speculative bet or a legitimate portfolio holding? Somewhere in between. Platinum's hydrogen fuel cell future is speculative but plausible. Its current discount to gold (historically unusual) provides a margin of safety. A 5-10% allocation within a metals portfolio is reasonable.
3c. What's the practical storage/liquidity consideration for each metal? Gold: Best liquidity, highest value density (easy to store). Silver: Bulky ($10,000 = ~125 oz = ~8 lbs), harder to store in size. Platinum: Good density but thinner dealer market—harder to sell quickly at fair prices.
Based on SD Bullion Market Update, Christmas Week 2025