China and Silver

Large gold nugget ring and 24.60 troy ounce silver bullion bar (poured ingot)
Large gold nugget ring and 24.60 troy ounce silver bullion bar (poured ingot)

One of the most interesting facts about silver stems from China. The world most populated nation has a strong bond towards silver in terms of commerce. The history of China and silver goes way back for thousands of years. According to historical facts between 1500 and 1800, Mexico and Peru produced almost 85 percent of the world’s silver which was what made these countries a viable trade option partner as the amount of precious metals produced by them were immense. At the same moment the trail of all the silver that was being produced by these two nations led to china.

Nearly all of all that silver was being directed towards China. This was sole due to 3 commodities that china had in vast amounts and were being traded for silver from the European communities. These 3 commodities were mainly Tea, porcelain and silk. For over 300 years the Chinese were hoarding the silver in their coffers in exchange for tea, silk and porcelain that the Chinese had in abundance.

The usual stereotype character that was linked with china about it being or having a closed door policy was totally misconstrued. The silver that was hoarded by China during these time accounts up to 40% of the total precious metal that was mined over 300 years. Eventually as the Chinese were demanding more silver in return for the goods that they were exporting, the Europeans found it difficult to pay in silver. As the Chinese started to strangle the exports causing the rise in prices of these commodities in the European market the Europeans (Britain) decided to off set the payments the idea was to export opium that was farmed by colonies of British India to china instead of silver. This act eventually led to the start of the opium war.

The question many ask is what did the Chinese want with the silver; the answer is rather simple as the Chinese new the value of the precious metal and was actually storing silver to buffer their purchasing power back from the Europeans. That being said the Chinese still have vast resources of silver in their federal reserves in the form of silver bullion and silver coins, along with being the current biggest global player to buy gold bullion, these metals act as a balancer to the Chinese currency. China since then has become on of the worlds strongest economy and a far fetched fact behind this rise economically from being one of the poorest countries in the world is the amount of silver that they have stored over the last 400 years in abundance.