Loading ...Silver often trades noticeably higher in Shanghai (the Shanghai Gold Exchange / SGE) than in London or New York for a mix of structural, regulatory, and supply-demand reasons, not because the metal itself is different.
Here are the main drivers, from most important to least:
1. China tightly controls silver imports
China does not allow free import/export of silver.
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Only licensed banks and firms can import silver
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Import quotas and approvals can be slow or limited
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When domestic demand rises, foreign silver can’t flow in quickly to arbitrage the price
This breaks the usual “buy low here, sell high there” mechanism that keeps global prices aligned.
2. Strong domestic demand
China is one of the largest silver consumers in the world, driven by:
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Solar panel manufacturing
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Electronics and semiconductors
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Industrial alloys and chemicals
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Jewelry and investment demand
When Chinese industry ramps up (especially solar), local demand spikes fast, pushing prices up inside China.
3. SGE prices are physical, not paper-based
Shanghai prices mostly reflect physical silver delivery, while:
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COMEX (US) and LBMA (London) are dominated by paper contracts and derivatives
Paper markets can suppress prices during periods of heavy short selling, while physical markets respond more directly to real shortages.
Result:
👉 Physical premiums appear in Shanghai first
4. VAT and transaction costs
Silver traded in China usually includes:
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Value-added tax (VAT) (often ~13%)
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Local logistics and financing costs
These alone can add a noticeable premium versus Western spot prices.
5. Currency effects (RMB vs USD)
Shanghai silver is priced in RMB, not dollars.
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RMB depreciation or capital controls can make metals more attractive
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Precious metals are a popular hedge inside China when confidence in financial assets weakens
6. Limited arbitrage
Even when Shanghai prices are much higher:
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Exporting silver out of China is restricted
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Importing large amounts quickly is difficult
So the premium can persist for months, instead of disappearing in days like it would between London and New York.
What the Shanghai premium usually signals
Historically, a large Shanghai silver premium suggests:
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Tight physical supply
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Rising industrial demand
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Stress or distortion in global silver markets
It does not automatically mean global prices will jump—but it often precedes periods of volatility.
In short
Silver is more expensive in Shanghai because:
China has high physical demand, strict import controls, and a market focused on real metal—not paper contracts.
If you want, I can also explain:
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How big the Shanghai premium is “normally”
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Whether it’s a bullish signal for global silver
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How arbitrage sometimes happens anyway
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The difference between gold vs silver premiums in China