This is a bullion market update from SD Bullion's James Anderson, covering an unexpectedly volatile Christmas trading week. The core narrative: Chinese exchanges are paying massive premiums for silver, platinum, and palladium, signaling potential supply shortages and a significant shift in precious metals markets.
- Shanghai Gold Exchange (SGE) and Shanghai Futures Exchange (SHFE) are paying unprecedented local premiums
- Silver: Over $82/oz in China vs. ~$79/oz in New York
- Palladium: ~$2,300/oz in China vs. $1,925/oz Western spot
- Platinum: ~$3,130/oz in China vs. $2,446/oz Western spot
- These premiums are NOT due to VAT—they reflect genuine demand/supply imbalance
- Gold/Platinum ratio: Fell from 3.5 (April 2025) to ~1.85 now—nearly halved in months
- Gold/Silver ratio: Down to 57 oz silver per 1 oz gold, breaking into the 50s
- S&P 500/Silver ratio: Now at 87 oz silver per S&P share (vs. 25 in 2011 bull, single digits in 1980)
- COMEX registered silver pile lost ~1/3 of inventory since September 2025
- London lease rates elevated = low/no available 1,000 oz bar float
- Chinese SGE/SHFE silver inventories remain low
- Industrial users scrambling to stockpile before prices/availability worsen
- China controls ~2/3 of global silver refining capacity
- Growing concerns about potential Chinese silver export restrictions in 2026-2027
- This gives China enormous price discovery leverage
- Silver: Closed week at $79+/oz (bid)
- Gold: $4,531/oz—new all-time weekly close
- Platinum: Broke past 2008 nominal high (~$2,300)
- Google Trends: US interest in gold/silver prices and "how to buy" at all-time highs
- Eastern world aggregated silver price (outside COMEX hours) near $400/oz and holding flat
- Anderson expects the Western spot price to eventually converge with this Eastern price during "mania phase"
- Silver breaking out vs. traditional 60/40 portfolio = capital rotation into hard assets
- Potential for silver to outperform US stocks by 4x to 40x based on historical ratios
| Theme | Significance |
|---|---|
| East-West Price Divergence | Chinese premiums suggest real physical demand outpacing paper markets |
| Supply Squeeze Dynamics | COMEX drawdowns + low London float = potential delivery failures |
| China's Refining Dominance | Strategic chokepoint risk for global silver supply |
| Ratio Compression | Gold/silver, gold/platinum, S&P/silver ratios all falling = precious metals outperforming |
| Retail Interest Surge | Google Trends at ATH = mainstream awareness growing |
| Triple-Digit Silver Consensus | $100+ silver in 2026 becoming "base case" among analysts |
1a. Is this purely industrial demand or is there speculative/strategic hoarding? China's industrial sector (solar panels, EVs, electronics) consumes massive silver quantities, but the premiums also suggest strategic stockpiling ahead of potential export restrictions. Government-aligned entities may be building reserves while they still control refining output.
1b. How do Chinese exchanges differ structurally from COMEX? SGE and SHFE are more physically-settled markets with tighter connections to actual delivery, unlike COMEX which is heavily paper/futures-driven. This means Chinese prices can diverge significantly when physical demand exceeds available supply.
1c. Could this premium spread trigger arbitrage that rebalances prices? In theory yes, but logistics (shipping 1,000 oz bars), export controls, and timing make arbitrage difficult. If China restricts exports, the premium could persist or widen, breaking the normal arbitrage mechanism entirely.
2a. What exactly is the "aggregated Eastern price" methodology? This refers to price discovery during Asian trading hours when COMEX is closed, often showing higher valuations. Critics argue this cherry-picks illiquid hours; proponents say it reveals suppressed true demand. The $400/oz figure likely uses specific calculation methods that aren't universally accepted.
2b. Why hasn't arbitrage closed the gap if Eastern prices are genuinely $400/oz? Physical delivery logistics, capital requirements, and market structure differences prevent easy arbitrage. Additionally, if premiums reflect local scarcity rather than global prices, arbitrage only works if you can move metal—which takes time and faces potential export barriers.
2c. What's the historical track record of these "convergence" predictions? The video claims four prior convergences since 1970 during mania phases. However, each mania had unique catalysts (1980 Hunt Brothers, 2011 post-GFC). Past convergence doesn't guarantee future timing—the 2011 peak was brief before a decade-long bear market.
3a. What macroeconomic conditions historically preceded gold/silver manias? High inflation, currency crises, loss of confidence in fiat systems, and geopolitical instability. The 1970s featured stagflation and dollar devaluation; 2011 followed QE and sovereign debt fears. Current conditions (high debt, de-dollarization trends) rhyme with these periods.
3b. How might AI and modern algorithmic trading change mania dynamics? Algos could accelerate price moves in both directions, creating faster spikes and crashes than 1980 or 2011. Retail access via apps could amplify FOMO-driven buying, while hedge fund positioning could trigger violent reversals.
3c. What role might central bank digital currencies (CBDCs) play? CBDCs could either suppress precious metals demand (by offering "safe" digital alternatives) or accelerate it (if people distrust government-controlled money). China's digital yuan rollout alongside metal hoarding suggests they're hedging both directions.
Source: SD Bullion YouTube Market Update, Christmas Week 2025