Economic Warfare 2.0

Economic Warfare 2.0

Guest Post by Dennis Miller at Miller On The Money

As silver prices continue to set new highs, pundits speculate about supply issues, market manipulation and inflation fears.

I contacted friend and expert Rich Checkan, President and Chief Operating Officer of Asset Strategies International. He said, “Last year marked the fifth consecutive year of deficit silver production. The physical silver shortfall was approaching a quarter of a billion ounces and there are roughly 356 futures contracts for every single physical ounce of silver.” The short supply issue is real.

China just changed the game – again!

Silver prices are surging; however, the underlying cause appears to be more than just a supply shortage. Effective January 1^st, China’s Ministry of Commerce instituted a new export-licensing agreement. China is now the gate keeper of approximately 121 million ounces of silver, estimated to be 70% of the world supply.

Rich continues:

“Export restrictions will cause an immediate and significant impact on supply… stressing an already stressed supply/demand dynamic. With minimum production requirements of 80 tons along with increased capital requirements and other restrictions, the list of potential exporters will dwindle for the world’s leading supplier of refined silver.”

It’s reported that only 44 companies are licensed to sell their silver to the global market. The supply situation has not changed. What has changed is China now controls much of the market.

Charlie Garcia, founder of the ultra-exclusive R360 club adds:

“China controls around 70% of the silver that Big Tech, AI and solar power desperately need. Beijing is locking the gates.

China is restricting silver exports because it needs the metal – and has figured out something America hasn’t.

A message to every Western manufacturer: You want to build the energy future – negotiate with Beijing.

…. Wall Street hyperventilated about margin hikes on silver traders. CNBC trotted out the usual suspects warning about ‘speculative excess.’ The X platform was full of people who couldn’t spell backwardation six months ago suddenly explaining why silver is overvalued.

They’re all missing the story. China just weaponized silver. And they did it while Americans were busy arguing about whether bitcoin (BTCUSD) is real money.”

China did this before. In 2010 they started licensing “rare earth” exports. It’s estimated that these “bureaucratic paperwork” requirements caused prices to spike 4,500%. Want to build a smartphone, missile, or other high-tech device, better learn to negotiate with Beijing.

Mr. Garcia continues:

“The rare-earth squeeze wasn’t dramatic. It was bureaucratic. Death by a thousand forms filed in triplicate.

…. Why you can’t mine your way out

…. Between 70% and 80% of global silver production is byproduct. It comes out of the ground attached to copper, lead, zinc and gold. The silver is incidental. A nice bonus.

The economic decision to dig the hole has almost nothing to do with silver prices.

This means you can’t just ‘mine more silver’ because silver prices went up. You’d have to mine more copper first. And copper miners don’t care what silver is doing. They care what copper is doing.

If some intrepid geologist found a massive silver deposit tomorrow morning, you’d see the first ounce around 2040. Maybe.”

Silver Mining

Investing News Network (INN) outlines mine production:

“Although China follows Mexico in global silver production, it leads the world in globally traded refined silver, accounting for roughly 70 percent of the market.”

INN lists the top 10 silver producing countries, totaling 20,800 metric tons. Mexico takes the top spot with 6,300 metric tons, followed by China with 3,300 metric tons. The US is 8^th with 1,100 metric tons.

What’s going on?

China mines approximately 16% of the top ten production, yet it controls 70% of the world supply?

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