David Rader

Chinese silver inventories: Are we watching the right numbers? Nobody knows with certainty how many tonnes of silver China (or, more precisely, Chinese entities) actually owns or controls. And we probably never will. The same applies to gold, oil, rare earths and other strategic commodities. In today's geopolitical environment, actual inventories of strategic resources are not merely an economic statistic. They are a matter of national security. 1️⃣ Exchange inventories are not the whole picture. SHFE and SGE report metal registered in their official warehouses. But they do not capture the full inventories held by refineries, traders, banks, industrial companies, state-owned enterprises or private investors. SHFE inventories fell from approximately 1,366 tonnes at the end of 2024 to 684 tonnes at the end of 2025. By February 2026, they had dropped to just around 311 tonnes. Dramatic? Yes. Proof that China is running out of silver? Not even close. Tracking SHFE and SGE inventories in an attempt to understand China's actual physical silver balance may well be a waste of time. Not because exchange data are worthless, but because we assign them far more significance than they actually deserve. 2️⃣ Chengtong illustrates the problem. China Chengtong is a state-owned group supervised by SASAC, with activities extending into the precious metals supply chain. In one instance, more than 158 tonnes of silver were added to SHFE warehouses, with a substantial portion linked to its warehousing system. Was this new silver entering the market? Not necessarily. It may simply have been existing metal transferred from off-exchange warehouses into the official system and registered in the form of warehouse warrants. Same metal, different statistics. But there is another important dimension here: Chengtong is not merely a passive part of the warehousing infrastructure. As a state-controlled player with access to physical metal, it can replenish exchange inventories whenever needed. Such transfers are not necessarily one-off events. This means that even when SHFE inventories fall sharply, replenishing them does not necessarily require new imports or new production. The metal can simply be transferred from another part of China's warehousing system. SHFE tells us how much metal is held in its warehouses, not how much silver China actually has available. 3️⃣ What remains outside the exchanges? According to SMM (Shanghai Metals Market, a Chinese metals market intelligence and research provider), China's so-called social inventories stood at approximately 3,834 tonnes as of October 22, 2026, down 75 tonnes in just one week. For comparison, the same report showed: SHFE warrant stocks: 1,378 tonnes. SGE warrant stocks: 885 tonnes. These categories may overlap, so they cannot simply be added together. Nevertheless, they illustrate just how incomplete a picture exchange statistics alone can provide. The bottom line Exchange inventories do not reliably reflect the total physical availability of silver within a country. 📌Falling SHFE inventories do not necessarily signal market stress. 📌Rising SHFE inventories do not necessarily mean new metal has entered the market. 📌State-controlled entities can transfer existing metal into exchange warehouses, replenish officially reported inventories and help manage market stress. Accurately analysing China's silver market is almost impossible. Interpreting incomplete data and assigning them disproportionate weight is not serious analysis. Exchange inventories are merely the tip of the iceberg. And nobody reliably knows how much lies beneath the surface. #Silver