America once had enough silver to meet its needs. But that's been outsourced, too.

By Charlie Garcia Charlie Garcia responds to readers' concerns about China's control of silver and other critical metals used in technology and defense Editor's note: Columnist Charlie Garcia shares select emails and online comments from his virtual mailbag each week. Dear Charlie, I have been skeptical of the recent silver (SI00) breakout from decades of consolidation, primarily because I remember the run-up and crash in 1980 caused by the Hunt brothers, and the run-up and crash in 2011. (Yeah, I'm that old. Sigh.) Looking at long-term charts of silver can be very sobering, and wild-eyed internet gurus, heavy on dark conspiracism with proclamations of $10,000 silver, are hardly reassuring. James Dear James, Your skepticism is an asset, not a liability. Anyone who remembers 1980 and 2011 has earned the right to be cautious. The Hunt brothers taught us what happens when speculation runs ahead of fundamentals. 2011 taught us what happens when margin hikes meet leveraged longs. Here's what's different this time: The thesis isn't about corner-the-market speculation or momentum traders piling in. It's about structural supply constraints meeting inelastic industrial demand. Solar panels don't care about chart patterns. Neither do EVs or AI data centers. And you can't mine your way out of a refining chokepoint. Does that mean $10,000 silver? No. The wild-eyed gurus do more harm than good. But it does mean the supply-demand math points in a direction that decades of consolidation didn't anticipate. Stay skeptical. Size positions carefully. Don't let 1980 blind you to 2026. Scars make better investors, Charlie P.S. Being old enough to remember two crashes means you're old enough to recognize when the setup is actually different. Trust your pattern recognition, not the gurus. Beijing thinks in decades. Washington thinks in election cycles. Dear Charlie, A message to every Western military-industrial manufacturer: You want to build a weapon? Too bad if you depend upon refined minerals from the PRC, because China is not going to export refined silver, tungsten, antimony, dysprosium, terbium, holmium, erbium, thulium, ytterbium, lutetium, samarium, yttrium or any other refined mineral that could be used to build a nuclear reactor, high-performance magnet, computer screen, laser, superconductor, heat-resistant capacitor or other possible military component. Houston (and Tokyo, D.C., London, Taipei, Seoul, Paris and Berlin), Western military-industrial manufacturers have a PROBLEM. Is there a duct-tape, Apollo-mission solution to this existential problem that can be applied before the West's stockpiles of essential refined minerals run out? Tony Dear Tony, That's not a comment. That's a threat assessment. And you're not wrong. Duct-tape Apollo solution? Here's the uncomfortable truth: The Apollo space program worked because America had the factories, the engineers and the materials already inside its border. The crisis was distance, not dependency. Today's crisis is that the factories are in Shenzhen, the engineers are trained there and the refined materials ship from Chinese ports. The U.S. is doing things. The Mountain Pass Rare Earth Mine, owned by MP Materials (MP), is open. Lynas Rare Earths (AU:LYC) is building its Texas capacity. The Defense Department is writing checks. But "doing things" and "solving the problem" aren't the same. Permitting for a new U.S. refinery takes longer than China needs to squeeze the existing supply. The West's stockpiles will buy time. How much time depends on which material and how hot things get. The duct-tape solution assumes you have duct tape - but the West's is now in China because it was cheaper. Thanks for asking the question nobody in Washington wants to answer honestly. We're improvising with what's left in the drawer, Charlie P.S. The Apollo engineers had slide rules and willpower. We have consultants and environmental-impact statements. Different era. Dear Charlie, The U.S. used to have a stockpile, but such ideas were considered quaint after the end of the Cold War and the ascent of neoliberalism. We could have positioned the nation to weather this storm, but the whole idea of civil defense, strategic national stockpiles and resource weaponization was abandoned. It was a fatal strategic mistake that should have been easily avoided. Bad leadership, bad ideas and total naivety about Chinese intentions. We're in a struggle for nothing less than world domination, and the Chinese are playing hardball. Zlatko Dear Zlatko, The strategic-stockpile history is one of those stories that makes you want to pour a drink and stare at the wall. The U.S. had silver. It had rare earths. America had critical materials stored for exactly this kind of scenario. Then Washington decided the Cold War was over and sold it all because markets are more efficient than warehouses. China watched America do this. Then it built the warehouses. Now it controls the refining; the processing; and, as of Jan. 1, the exit doors. "World domination" is a strong phrase. I'd say it's simpler than that: China wants leverage - and built it while the U.S. was optimizing quarterly earnings. The naivety wasn't about Chinese intentions. It was about believing everyone shares America's assumptions about how the world works. They don't. Thanks for reading and for the cold splash of strategic reality. Efficiency is a peacetime luxury, Charlie P.S. The same people who sold the stockpiles will be shocked - shocked - when supply chains break. They always are. Dear Charlie, You are factually right, but this could go many ways. Mind you, China does NOT PRODUCE silver if it's a copper byproduct. You know who the big copper miners are, and they are all OUTSIDE China. So the rest of the world doesn't need to suddenly spend 20 years digging new mines; it just needs to build refiners. Much different story. AND mind you, China is not the cheapest place to build any kind of factories nowadays. Far from it. So your story, sorry, doesn't hold as much water as the title sounds. Medicine Landscape Dear Medicine Landscape, Fair point on mining, but you're conflating two different things. China doesn't mine most silver. Mexico, Peru and Chile do. But China controls 60%-70% of global silver refining. China imports doré from those mines, processing and re-exporting it. The chokepoint is the refinery, not the mine. "Just build refineries" sounds simple. It isn't. Rare-earth precedent: three to five years for facility construction; five to 10 years for workforce training; and 10 to 15 years, total, for meaningful Western capacity. That's with sustained government investment that doesn't currently exist. Meanwhile, U.S. refineries are clogged. Major refiners stopped accepting silver in October. Backlogs are running three to four months. This hasn't happened in 40 years - and that's before China's restrictions. You may be right in 2035. I'm positioned for 2026. Timelines matter more than theories, Charlie P.S. The cheapest place to build a factory is wherever the workforce already knows how to run it. China spent decades becoming that place. America spent decades forgetting it once was. Dear Charlie, I am especially intrigued by China's repeat of its rare-earth ploy. It has always been interesting to me that a communist country could be so shrewd and create such effective strategies to exploit capitalist markets. I do have one question: I am wondering if all the falderol in the U.S. Interior Department to develop a list of critical minerals is being done with an idea of mimicking the China strategy. Any thoughts? Michal Anne Dear Michal Anne, To your question: yes - but don't hold your breath. The U.S. Geological Survey added silver to its critical-minerals list in 2024. That's the first step. But here's the gap: China didn't just make lists. It spent 30 years building integrated refining infrastructure, accepting environmental tradeoffs Western nations won't and subsidizing state champions until it dominated global processing. America's critical-minerals strategy is mostly defensive: stockpiling, allied sourcing, permitting reform - necessary, but reactive. The U.S. is playing catchup on a 10- to 15-year timeline while China holds the chokepoint today. The irony you're noting is real. Communist Party central planning turns out to be devastatingly effective at cornering commodity supply chains. Free markets are efficient at allocation but terrible at strategic patience. Beijing thinks in decades. Washington thinks in election cycles. So, yes, the Interior Department is trying. But mimicking China's strategy would require sustained bipartisan commitment and billions of dollars committed to refining infrastructure. I'll believe it when I see the shovels, not the lists. Lists are aspirations, shovels are policy, Charlie P.S. The communists read Adam Smith. We assumed they didn't have to. Dear Charlie, The West should go nuclear. Adding more nuclear energy to the mix of natural gas, solar and wind to deal with rising energy demands due to AI, EV, advanced manufacturing, electrification and precious-metals refining. This will also help meeting the challenge of climate change. On a side note, when speaking about communist bureaucracy, Oliver North was asked by Hanoi to fill out a 20-page questionnaire when he applied for an entry visa to return to Vietnam! Hoa Dear Hoa, You've connected nuclear-energy policy to Oliver North's Vietnam visa in a single comment, and, frankly, I'm impressed. (MORE TO FOLLOW) Dow Jones Newswires 01-03-26 1202ET