Silver Price Plunges as Treasury Yields Soar and China Tightens Export Controls

Higher Treasury yields have been draining momentum from silver ETFs as investors consider alternative investments that offer interest income. The 10-year Treasury yield recently reached its highest level since June 2007 at 5.238%, while markets anticipate an October Fed hike with a probability of over 72%. As a result, many silver funds have seen substantial outflows, including a large silver-mining ETF called SIL.

However, this doesn't necessarily mean that physical silver demand has decreased. China's role in the global silver market is more complex and nuanced than initially thought. Beijing maintains a state-trading and licensing regime for silver exports, which restricts eligible exporters but does not impose an outright export ban. In fact, Chinese silver exports reached 5,100 tonnes in 2025, their highest level in at least 16 years.

China's significant consumption of silver, particularly from investors and the solar industry, creates a structural tension that affects global supply. Much of the world's mine production comes as a by-product of other metals, limiting the speed at which higher silver prices can create additional primary supply. The Silver Institute expects the global market to remain in deficit for a sixth consecutive year in 2026.