Elon Musk Warns 'This Is Not Good' as Silver Hits Record £58 Before China Export Restrictions

Elon Musk has issued a stark warning about surging silver prices as the precious metal hit a record £58 ($76.37) per ounce on 27 December, just days before China imposes sweeping export restrictions.

The Tesla chief executive responded to concerns about global silver shortages on X, stating bluntly that the situation is problematic because silver is essential in numerous industrial processes, according to Benzinga. His comments came as silver prices jumped 10.21 per cent overnight, marking the metal's best year since 1979.

Musk's warning underscores mounting anxiety across manufacturing sectors that rely heavily on silver for everything from electric vehicles to semiconductors. The timing could hardly be worse for industries already navigating supply chain pressures and economic uncertainty.

China's Export Crackdown Takes Effect

From 1 January 2026, China will require exporters of silver, tungsten, and antimony to obtain government licences from the Ministry of Commerce. The restrictions effectively block small and mid-sized exporters, reducing international supply almost immediately, The Telegraph reported.

Companies must produce at least 80 tonnes of silver annually and hold £23.6 million ($30 million) in credit lines to qualify for export licences. The measures consolidate control amongst state-approved entities whilst excluding smaller players from the global market.

China controls between 60 and 70 per cent of global silver refining capacity despite producing only around 13 per cent of mined output. Beijing announced the rules in late October, claiming they were designed to protect resources and strengthen management of rare metal exports.

The move mirrors earlier Chinese restrictions on rare earth elements and represents a deliberate strategy to consolidate leverage over global supply chains for critical materials.

Why Silver Matters for Industry

Silver has evolved from primarily a precious metal investment into a critical industrial commodity with irreplaceable properties. Its exceptional electrical and thermal conductivity, combined with chemical stability, make it essential across multiple sectors.

The solar photovoltaic industry accounts for 20 per cent of global silver consumption, with no viable substitutes available. Each electric vehicle contains between 25 and 50 grammes of silver in electrical contacts, power electronics, and control systems.

Tesla vehicles fall into this range, though the company does not publicly disclose total silver consumption figures, TheStreet noted. Industry estimates suggest this translates to roughly 0.8 to 1.6 troy ounces per vehicle.

Electronics manufacturers rely on silver for semiconductors and circuit boards. Medical device producers use it for its antimicrobial properties. Artificial intelligence hardware production demands increasing quantities as data centres expand globally.

Industrial applications now represent between 50 and 60 per cent of total silver demand, making price volatility a serious concern for manufacturers who cannot easily substitute alternative materials.

Supply Crisis Five Years in the Making

The global silver market has operated in structural deficit for five consecutive years. In 2025 alone, demand reached 1.24 billion ounces whilst supply lagged at 1.01 billion ounces, creating a 230 million ounce shortfall.

Physical inventories at major trading hubs have plummeted to historic lows. COMEX stocks are down 70 per cent since 2020, whilst Shanghai inventories sit at 10-year lows. This scarcity has driven the record price increases witnessed throughout December.

Silver mining faces structural rigidity that prevents rapid production increases. Approximately 70 per cent of silver is produced as a byproduct of base metal mining, meaning dedicated silver mines cannot quickly respond to price spikes.

Investment demand has surged alongside industrial consumption. Safe-haven flows increased as investors sought protection against inflation, geopolitical tensions and government debt concerns. Federal Reserve interest rate cuts enhanced silver's appeal as a non-yielding asset.

Record Rally Reshapes Markets

The Telegraph had reported that silver has rallied 159 per cent in 2025, more than double the 70 per cent rise in gold prices over the same period. The precious metal broke its previous record of £36.97 ($49.95) set in January 1980 during the infamous Hunt brothers' attempt to corner the market.

The latest peak of £60.26 ($79.36) represents an unprecedented surge driven by multiple converging factors. China's export restrictions have sparked a scramble amongst industrial buyers to secure supplies before the January deadline.

Platinum prices have also climbed to record highs, rising more than 40 per cent in the last month to trade above £1,826 ($2,400) per ounce. Copper jumped 4.85 per cent on 27 December and is now up 45 per cent since the start of the year.

Some market observers have begun suggesting that liquidity could rotate from silver into Bitcoin and cryptocurrencies in 2026. However, others argue that silver's industrial applications create genuine supply constraints that differ fundamentally from digital assets.

Impact on Manufacturing and Consumers

The shortage could ripple through electric vehicle, solar panel, and electronics manufacturing, potentially driving up costs and slowing production growth. Companies face difficult choices between absorbing higher input costs or passing them to consumers.

UK investors tracking the silver price must account for both global metal movements and sterling fluctuations. A stronger pound can offset some dollar gains, whilst a weaker pound amplifies them.

Silver purchases in the UK are generally subject to 20 per cent VAT, which widens breakeven points for physical investors. Exchange-traded products offer simpler exposure with tighter spreads, and many are eligible for ISAs and SIPPs.

Analysts project continued strength in silver prices throughout 2026. Some expect industrial demand to outpace supply further, potentially driving prices towards £76 ($100) per ounce if the supply crunch intensifies, per Whalesbrook.

The convergence of technological needs, supply constraints, and favourable macroeconomic conditions suggests a sustained bullish environment. Mining equities have surged 150 per cent in 2025 as investors bet on structural supply rigidity.

For manufacturers like Tesla navigating the clean energy transition, securing reliable silver supplies at manageable prices has become a strategic imperative. Musk's warning reflects growing recognition that critical mineral shortages pose real threats to industrial production targets.