Silver is surging. Why now?

THE US GOVERNMENT, THE CHINESE GOVERNMENT, JP MORGAN, THE SHANGHAI GOLD EXCHANGE, APPLE, TESLA, AND CHINESE INDUSTRIAL COMPANIES ALL WANT TO BUY YOUR SILVER. DON'T SELL IT TO THEM.

Over the past few weeks, the price of silver has done something that always captures attention. It moved fast, it crossed a round number, and it triggered a wave of emotion. Since the start of the year alone, silver has risen roughly 40%, climbing from the low $70s to above $100 an ounce. That kind of move inevitably brings out two groups of people. One group feels euphoric and fears being left behind. The other feels anxious and starts thinking it’s time to cash out.

Both reactions are understandable. Both are usually wrong.

A few days ago, my wife went to a local jewelry store to have some items appraised for insurance purposes. She expected the jewelry to be worth more than it had been a few years ago, and it was. But what caught her attention was something else entirely. The shop was crowded—not with buyers, but with sellers. People were lined up to sell silver coins, silverware, tea sets, anything made of silver. The jeweler told her he had never been so busy, and that he was buying everything people brought in.

That scene tells you a lot about human psychology. When prices rise sharply, people don’t just feel wealthier. They feel tempted. The same price movement that confirms a long-term thesis can also whisper, “Take the money and run.”

This piece and my latest YouTube video essay are my attempt to explain why, in the case of silver, that whisper should be ignored.

A REMARKABLE YEAR - AND IT ISN’T OVER

Looking back at calendar year 2025, the numbers are striking. Gold rose about 85%. Silver rose roughly 220%. Precious metals mining stocks, measured by the GDX index, rose around 170%. All of these returns far exceeded stocks, bonds, and broad commodity indexes.

And importantly, those trends have not reversed in the early weeks of 2026. Gold, silver, and mining stocks have continued to rise, with silver once again leading the pack. This is not a one-week spike or a speculative frenzy driven by social media chatter. It is the continuation of a multi-year repricing.

Regular readers know that I’ve been advocating precious metals and mining stocks for years, not as a trade, but as part of a diversified, defensive investment strategy. That strategy also includes dividend-oriented value stocks, a meaningful allocation to cash in short-term Treasury bills, and a complete avoidance of long-term bonds. That mix has worked well for me, and it remains my recommendation today.

When silver was still in the mid-$70s late last year, I wrote that it was fundamentally repricing—and that it wasn’t over yet. The recent move has only reinforced that view.

THIS IS NOT ABOUT SPECULATION

One of the most common misunderstandings about silver is the belief that its price is driven primarily by investor enthusiasm or speculative demand. In reality, what is happening now is far more consequential.

The United States government has begun to treat silver as a strategic metal. Not just an industrial input, but a material with direct implications for national security. The U.S. imports roughly two-thirds of the silver it consumes each year. When you combine military, industrial, and monetary demand, the country runs a persistent domestic supply deficit.

That vulnerability matters in a world where supply chains are no longer assumed to be stable or apolitical.

Recently, the U.S. government formally designated silver as a strategic metal, alongside copper and other critical materials. Congress is poised to vote on bipartisan legislation allocating billions of dollars to acquire strategic metals. Within the context of a $7 trillion federal budget, those figures may sound modest. But silver is a relatively small market. Government demand of that magnitude can set a meaningful price floor.

At the same time, the Department of Defense has taken a direct stake in refining capacity, and policy changes are coming that may allow retirement accounts to invest in commodities and alternative assets, including precious metals. These are not speculative signals. They are structural ones.

THE CHINA FACTOR

What makes the silver story even more compelling is that the United States is not acting alone.

China views silver not only as an industrial and military asset, but also as a monetary metal. This is deeply rooted in Chinese history. For centuries—stretching from the Ming dynasty through the Qing dynasty and into the early 20th century—China operated on a silver-based monetary system. That legacy still shapes public attitudes today.

In recent weeks, China imposed strict export licensing controls on silver. In plain terms, you now need government permission to take silver out of the country. China is the world’s third-largest producer of silver, but it is the largest refiner and consumer. Like the U.S., it runs a chronic supply deficit.

At the Shanghai Gold Exchange, silver has been trading at a significant premium—roughly $10 higher than prices in the United States. That kind of price differential is highly unusual and suggests severe physical tightness. Reports indicate that physical inventories at major exchanges are shrinking rapidly, while industrial buyers continue to pay whatever price is necessary to secure supply.

Why doesn’t the higher price slow demand? Because silver, though critical, represents a small fraction of the total cost of high-value products. Doubling the price of silver barely registers in the cost of an iPhone, a Tesla, or a missile system. Industry can absorb it and pass it along.

GEOPOLITICS AND REALITY

Much of what we are seeing now makes little sense if you look at markets through the lens of the last thirty years. Globalization, just-in-time delivery, and frictionless trade are no longer reliable assumptions. We are entering a period defined by regionalism, supply security, and strategic competition—especially between the U.S. and China.

In that environment, silver matters. You cannot build radars, drones, missiles, or advanced aircraft without it. You cannot electrify transportation or scale energy infrastructure without it. New mines take years to develop, and known reserves are concentrated in a handful of countries, particularly Peru and Mexico. So expect high silver prices to remain elevated for a long time.

From this perspective, silver’s price is not rising because people suddenly like it. It is rising because governments and industries need it.

ABOUT THOSE ROUND NUMBERS

Finally, a word about psychology. Prices like $100 silver or $5,000 gold feel important because they are easy to remember. They create emotional pressure. Some people see them as a signal to sell. Others see them as proof they’re being left behind.

After forty years in the investment business, I can tell you that these psychological thresholds rarely matter in the long run. They create noise, volatility, and short-term churn. But three, four, or five years from now, they are unlikely to be meaningful reference points.

So what am I doing with my silver? Nothing. I already own precious metals in proportions that make sense for me, and I intend to hold them. I don’t pay much attention to round numbers except as an interested observer.

Silver is becoming a strategic asset for governments. In my view, that makes it a strategic asset for individuals as well. Unless you need cash for a genuine personal emergency, my advice is simple: don’t sell your silver.

“Like” this post, then view and subscribe to my YouTube Channel, which explains this article in detail.

And if you have not already done so, read my book, A Black Hole in Economics, to see how precious metals fit into a world of fiat money gone wild.

HarmoneyJim, January 26, 2026