Communists Just LOVE Silver I Guess

Did you hear the narrative about how the CCP is responsible for the run up in the price of Silver? It wouldn’t be a big surprise if you had. The parabolic price trend in Gold and Silver during 2025 has been treated to a variety of narratives, several of which conflict. 

In fact if you ask your favorite large-language model service (yes I’m talking about AI), to give you a one-word bullet list of the top 10 theories explaining the price trend in precious metals, you’d get something like this:

• Dedollarization
• Geopolitics
• Central‑banks
• Real‑yields
• Industry
• Debt
• Liquidity
• Tariffs
• BRICS
• Momentum 

What stands out to me here is that the lack of consensus usually translates into something I like to call “organic trend.” What I mean by that is that no single force is big enough to do this alone. The combination of reasons from a wide variety of investors is what has built this megatrend into a mania. 

After the last two sessions it is highly relevant to ask if the party is over. Such a thing is very difficult to determine at the moment, unless of course, there really is only one reason for the trend. Once that reason changes, then the end of the trend can be readily identified.

So indulge me a bit here and let me explore the original premise with you by asking this question. Is this all China’s fault?

Now, it is worth noting that there is actually a lot of drama about the origin of this idea among YouTube content creators. These two give you a hint of the fun: 

Exploring the “Asian Guy” Enigma: What’s Behind the Flood of Silver Videos? – Part 1  

Who is John AG?—The Reall Truth Behind Many Channels

But the basic thesis goes like this: thanks to Trump, China can’t get cheap oil out of Venezuela or Iran, so clearly their only option is to go 2017 Bitcoin maximalist on Silver through a not-so-well coordinated bout of panic buying. 

Righty-o.

Meanwhile the chart above forms the first of three, that actually seems to say the idea is less crazy than it sounds. 

This chart compares the Chinese equivalent of SPY. It’s iShares’ China Large-Cap Index ETF, ticker FXI. I compare it with the price of iShares’ Silver Trust, ticker SLV, over the past two years, and add a correlation coefficient below. 

I find the positive correlation very interesting, and my eye is drawn to two periods of inverse correlation around the end of the year 2023 and recently. Now if this trend weren’t specific to Silver, other chart should look similar. Let’s see.

Is Gold the Cart and Silver the Horse?

The control group data is clearly the SPDR Gold shares (GLD), but when you look at the same kind of chart, what do you see? A whole lot less correlation.

All along the way, everyone assumed Gold was leading Silver along up until recently. Could it be that we had it backwards all along?

Maybe it isn’t All Dedollarization

Some writers and content creators have pointed out that a major influence on the price of gold is the devaluation of the U.S. dollar along with the macroeconomic Dedollarization shift (the idea that a lot of BRICS nations don’t want to pay for things using U.S. dollars anymore). 

That has been a prevailing narrative because it seems quite logical considering all that is happening geopolitically. However, this chart doesn’t really seem to track.

If this influence were the primary source of the trend, and not just something added into the mix, then this chart should have a high degree of correlation. But it does not. We see a rise in the price of Gold even though the dollar has significant periods of both strengthening and weakening at different times. 

A logical retort is that macro trends are messy, not linear, the variations are an artifact of the charting time frames. Sure. 

Meanwhile, back to chart one. Color me skeptical. 

But the bigger idea here is what to do about it. The answer? Don’t expect the precious metals trend to continue. At least not until a high degree of correlation between FXI and SLV resumes.

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