As the primary financial, military, and cultural US rival in the battle for geopolitical supremacy, China has found itself outmaneuvered by President Donald Trump in the energy arena. US control over China’s main oil suppliers – Iran and Venezuela – have undermined a significant portion of its leverage. However, China has other cards to play in retaliation, and one of the main ones has been silver.
The futures markets have colluded to suppress silver prices around the globe for decades, but physical silver demand broke out in 2025 and the fundamentals for its bull run have not changed. However, China exercises an outsized control over the current global silver bullion market, and there is evidence already appearing that it will counter US moves in oil with comparable ones in silver. That means another likely silver bull run in 2026 for stocks and ETFs dealing with physical silver. Among these are:
- iShares Silver trust ETF (NYSE: SLV | SLV Price Prediction)
- Abrdn Physical Silver Shares ETF (NYSE: SIVR)
- Global X Silver Miners ETF (NYSE: SIL)
Record China Silver Imports
China’s silver imports have been at record levels throughout 2026.
The Shanghai Futures Exchange nearly found itself in default for March delivery contracts as its inventories had been sorely depleted due to its bailing out of the UK’s LBMA in October 2025. LBMA nearly defaulted as its inventories were unprepared for a huge Diwali-fueled physical silver buying surge from Indian buyers. As a result, the SHFE hiked margin requirements for silver to 22% and went on a buying spree, increasing silver inventory by over 50% in March. Bloomberg reported that inclusive of industrial demand, China imported over 800 tons of silver in March, more than double its previous high of roughly 425 tons in December 2020.
Nevertheless, inventory inflows are still finding it difficult to safely accommodate demand outflows, and despite futures price manipulation to accommodate naked short sellers, physical purchase prices have stayed strong in China, increasing backwardation ratios. SHFE’s inventory hoarding is leaving COMEX precariously undersupplied for May deliveries at the time of this writing. Panic buying may likely generate another short squeeze if the short sellers are unable to maintain downward price pressure.
Bullion Supply Chokehold
China has a chokehold supply on 70% of global silver bullion, as well as 40% of global sulfuric acid, which is necessary for silver ore extraction.
China currently controls about 70% of silver bullion that meets “Good London Delivery” standard. Since silver ore is not mined specifically, but is a by-product of iron, copper, nickel and other mining operations, it needs to be separated for processing. Starting on May 1, China initiated a ban on exporting sulfuric acid, an essential component for heap leaching, which is the primary method of extracting silver from copper ore. China controls 40% of the sulfuric acid market. Combined with its addition of silver to its restricted materials export list of rare-earth minerals, China is attempting to regain lost international trade ground from the US.
China’s timing is strategic – Iran is one of the largest market suppliers of sulphur. With the US naval blockade of the Strait of Hormuz still in effect, China’s sulfuric acid supplies have gained a greater near monopoly with supply chain options for alternate sulfuric acid production sorely limited.
Adding further upward pressure to physical silver prices, China’s physical silver demand is dwarfed by that of India (over 2x), which shows little sign of abatement in 2026.
New “Terminator” Market Demand
China leads the world in making humanoid robots which may swell from 5 million to over 1 billion by 2050 – “Terminator” level numbers.
The Terminator movie franchise made a star of Arnold Schwarzenegger and ushered in a sci-fi world dominated by killer humanoid robots. Elon Musk’s Optimus is leading the field in the US, but China’s humanoid and service robots already dominate the roughly 5 million currently in existence.
Morgan Stanley published a report titled, “Humanoids: A $5 Trillion Market” last year. The report estimates that the number of humanoid robots is likely to swell to over t billion by 2050. Even with a conservative 20g of silver estimate per robot required for operation, this will easily become another gargantuan industrial demand use for silver that will not be recoverable, so it will be considered another “permanent destruction” of silver, akin to that of solar panels, data centers, EVs, semiconductors, flat screen TVs, smartphones, et. al.
To explain the math: 1 billion robots at 20g of silver equates to 20,000 metric tons, or roughly 705.48 million oz.
With silver so crucial to all of the new technological advances we are enjoying and developing further in A.I., quantum computing, robotics, etc., the silver supply crunch will inevitably cause further sustained bullish trends. The fact that global silver demand will outpace production going into a 7th consecutive year soon means even greater scarcity and higher prices for the foreseeable future. While the futures markets may try to push silver prices down again, it will probably only be a temporary measure for major institutions to unwind the short positions before the next surge. That window may be the last buying opportunity to buy silver in double-digits before prices surge again past $100. If that is the case, holders of SLV, SIVR and SIL should all see a proportionately strong gain as well – SIL and SIVR due to their respective physical silver inventories, and SIL as a result of its holdings of silver mining companies.
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