China just did something very strategic: they stopped selling silver.

Silver prices are soaring, up 150% YTD, not only because of speculation, but also because it's a necessity in solar panels, computers, cars, batteries, etc.

The price is determined by two primary exchanges: COMEX (in New York) and the Shanghai Futures Exchange (in China). COMEX silver is mostly paper silver where the price is set by options traders who rarely take delivery of the silver while the Shanghai silver prices is set by physical silver.

And now the physical prices are ~$5 above the paper prices.... which means that something broke.

Unlike gold, when silver gets more expensive, industries don't stop buying it.

China reclassified silver under the dual use export control rules which means that if it can be used for civilian purposes it can also be used for military purposes. Once this happens, then exports are no longer automatic. Instead, they need to be approved by the government.

Even if silver is mined in Mexico or Australia, there is a very good chance it still passes through Chinese infrastructure before it ever becomes a usable metal.

China learned the hard lesson 100 years ago: if you don't control the resource, it gets weaponized against you.

Now they are doing just that.