BREAKING: Silver Classified as a Critical Mineral
Phillip Patrick
 Silver is no longer just another commodity. By placing it on the U.S. Critical Minerals List, Washington has elevated silver to the ranks of materials vital to energy, defense, and national security. What does this mean for price?
As of August 25, The Secretary of the Interior has added silver to the existing U.S. List of Critical Minerals (LCM). This is an important change that could have important implications for silver prices in the weeks and months ahead.
What counts as a critical mineral?
The U.S. Geological Survey analyzes the importance of raw materials to the overall economy. They’re interested in identifying key materials that:
- Might become unavailable due to trade disruption
- Rely on a sole domestic producer
- Play an outsized role in the economy (especially in the defense sector)
The latest revision adds several other minerals including silver to the critical list (including copper and rhenium).
What makes silver a critical mineral?
Two characteristics of silver supply and demand qualify it as a critical mineral in the U.S. economy:
- The U.S. silver supply is heavily dependent on imports
- Domestic silver demand comes from a variety of crucial industries (automotive, electronics and defense)
Today, the U.S. imports the majority of our silver in large quantities (depending on year, anywhere from 67-80% of silver supply must be imported). The USGS reports annually on mineral supply and demand. Over the last few years, we’ve relied heavily on imports from:
- Mexico: 44%
- Canada: 18%
- Poland: 5%
- Switzerland: 4%
- Other nations: 29%
I was seriously concerned about the Liberation Day tariffs and their impact on silver imports from Mexico and Canada – fortunately, President Trump exempted bullion from those tariffs. Even so, you can see exactly how dependent we are on imports for silver.
What does “critical mineral” status really mean?
Critical mineral status brings the Defense Production Act (DPA) into play. Originally, this law passed in 1950 during the Korean War. The DPA gives the President broad powers to direct industrial production in the name of national security.
In the recent past, the DPA has been invoked to boost semiconductor (chip) production, battery manufacturing and the mining and processing of rare earth elements.
In the case of silver, the DPA allows the federal government to:
- Fund or subsidize mining/refining projects: For example, to provide low-cost loans or grants to silver miners to help them expand domestic production.
- Prioritize supplies for high-impact sectors: The federal government can force suppliers to direct output toward defense or energy sectors rather than exporting silver.
- Develop domestic stockpiles: The government can literally buy silver and build up a strategic reserve for defense use.
The Strategic Petroleum Reserve (SPR) is one example of a critical asset stockpile. The SPR was created in 1975 as a response to the 1973-74 Arab oil embargo (especially the fuel shortages, rationing and price spikes that resulted). The White House wanted to ensure the U.S. economy couldn’t be pushed into recession by a foreign supply shock. So, today, a series of salt caverns along the Gulf Coast of Texas and Louisiana store about 714 million barrels of crude oil.
Silver’s new “critical mineral” designation frames it the same way: A supply disruption could undermine not just consumer products but also vital defense and energy applications.
Doesn’t the U.S. already have silver stockpiles?
Not exactly, no – the U.S. Mint has a reserve of silver for minting American silver eagle coins and other products. This is their working stock, though – not a strategic reserve.
The USGS estimates that various industries have some 50-60 tons of silver for their own use – like the U.S. Mint, though, this isn’t a reserve. It’s just their pipeline stock, needed for the next few weeks or months of production.
Historically, the U.S. held large silver reserves as part of the National Defense Stockpile (NDS, dating back to WWII and the Cold War). But those holdings were liquidated through the 1990s. By 2000, virtually all strategic silver had been sold off. Today, the Defense Logistics Agency’s NDS does not list silver as a current holding.
In other words, the U.S. does not have a strategic silver stockpile today.
How will this decision affect silver’s price?
To be frank, I’m not certain exactly how much silver’s price will be affected by this decision. I strongly suspect that, the first time news of the federal government’s silver stockpiling hits the mainstream media will likely draw strong interest.
We're working to model how this decision will affect the price of silver – stay tuned for further updates.
Phillip Patrick is a Precious Metals Specialist and spokesman for Birch Gold Group. Born in London, he earned a degree in politics and international relations from the University of Redding, and began his career as a wealth manager at Citigroup in London’s financial center. Since joining Birch Gold in 2012, Phillip has become a trusted voice on economic policy and precious metals, appearing as a guest on dozens of television and podcast platforms, including Newsmax, The Ben Shapiro Show, The Megyn Kelly Show, and Stephen K. Bannon’s War Room. In addition to his contributions on Birch Gold Group's blog, you can watch his interviews on Rumble and follow him on Gettr.dailyreckoning.com
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