UAE Joins US-Led 'Pax Silica' AI & Chip Supply Chain Alliance

Silver prices recently hit an all-time high of US$92 an ounce, with industry leaders dubbing it the "next generational metal." The rally is fueled by surging demand from the green energy transition, electrification, and data centers, all happening against the backdrop of a persistent supply deficit.

Despite holding some of the world's richest silver deposits, Canada does not consider the metal a strategic priority and has excluded it from its official critical minerals list.

Silver Booms, But Canada's Official List Excludes It

Industry experts are questioning Ottawa's decision. "I think it would be short sighted of them to leave it off," said Michael DiRienzo, president and CEO of the Silver Institute, a global industry organization.

Canada’s Natural Resources Department defends its list of 34 critical minerals as the "foundation" for modern technology and a green economy. The department explicitly stated that silver was left off because it "does not meet Canada's definition of a critical mineral as there is a robust global supply of silver, and its supply chain is not threatened."

DiRienzo directly challenges this assessment, pointing to a projected global market shortfall of 95 million ounces this year. "The amount of silver coming to the market is less than what our demand requirements are," he explained.

Because silver is often produced as a byproduct of mining for other metals like gold, copper, and nickel, its exclusion from Canada's list means it lacks the strategic focus and policy support given to other materials essential for electrification.

Figure 1: Canada's official list of 34 critical minerals, which notably excludes silver despite its growing industrial applications.

Industry Leaders Push Back, Citing U.S. Precedent

The debate is intensifying, especially since the United States added silver to its own critical minerals list in November of last year. DiRienzo argues that Canada should follow this move, which he says "formally recognized silver's transformation from primarily a precious metal into a strategic industrial commodity."

The metal's industrial importance is undeniable. A report from the Silver Institute highlights that global information technology capacity has expanded by over 5,000 percent in the last 25 years. As DiRienzo puts it, "Anything that has an on-and-off switch has silver inside of it."

Canadian Miners Formally Lobby for Silver's Inclusion

Canadian mining executives are actively pressing the government for a policy reversal. Last year, First Majestic Silver and around 20 other industry leaders sent an open letter to the Ministry of Energy and Natural Resources urging the reclassification of silver.

The letter pointed out that while Canada was the 13th-largest global silver producer in 2022 and the second-largest supplier to the U.S., its domestic output has fallen over the last decade due to declining ore grades and aging mines.

The group argued that silver meets all three of the government's own criteria for a critical mineral:

• Essential to Canada's economic or national security

• Required for the transition to a low-carbon and digital economy

• Positions Canada as a strategic global partner

The letter also contested the government's supply assumptions, citing a massive 237.7 million-ounce market deficit recorded in 2022. Canada's critical minerals list, last updated in 2024, is reviewed every three years.

A Flawed Strategy? Questioning the "Critical" Label

However, not everyone believes that adding silver to the list is the solution. Jack M. Mintz, a public policy analyst at the C.D. Howe Institute, suggests the entire focus on designating "critical" minerals may be misguided.

"I really think this whole focus on critical minerals is wrong," Mintz said, noting that mining deposits often contain multiple minerals, making it impractical to apply separate policies to each one. He expressed concern about the risks of governments picking winners and losers in the sector.

"I always get a little bit worried when governments are taking winners and losers," Mintz stated. "We're still doing that, and I think that's one of the political problems that we're going to be creating as a risk."

The Dual Appeal: Why Investors Are Watching Silver

For investors, silver's profile is rising. According to Brooke Thackray, a research analyst at Global X, silver is emerging as a top metal to watch heading into 2026.

Its appeal is twofold. "Not only is it a critical mineral needed to produce EV cars, solar panels, all that sort of stuff, but at the same time, it's also an investment vehicle," Thackray explained.

He added that because silver production is tied to other metals, its supply cannot ramp up quickly to meet rising prices, even as demand continues to climb. This dynamic creates a unique investment case. "So it's sort of like a little bit of a diversification," said Thackray.

The European Union has given Germany the green light to subsidize a new fleet of gas-fired power plants, a critical step in the country's energy transition strategy. The European Commission's approval also clears the way for a separate €12 billion package designed to lower electricity prices for German industry.

Chancellor Friedrich Merz confirmed the decision, noting that EU approval was necessary because the plan involves significant government subsidies.

Germany's Strategy for Energy Stability

As Germany moves to phase out coal and after shutting down its last nuclear reactors nearly three years ago, it faces the challenge of ensuring a stable power supply. The new gas-fired plants are intended to provide flexible power when renewable sources like wind and solar are not available.

The government's plan includes several key components:

• Initial Bids: Germany aims to solicit bids this year to construct 8 gigawatts of new gas-fired power plants.

• Timeline: These plants are scheduled to be operational by 2031.

• Future-Proofing: An additional 4 gigawatts of capacity are planned for lower-carbon energy sources or gas plants designed for a rapid conversion to hydrogen.

€12 Billion Relief Package for German Industry

Alongside the power plant strategy, the EU has approved a plan to help Germany's struggling industrial sector cope with high energy costs. The government will now move forward with a combined relief package.

The support for businesses will be drawn from two main instruments:

• A €7.5 billion relief measure targeted at small and mid-sized enterprises.

• An existing €4.5 billion program that reimburses companies for the cost of carbon allowances, which will be extended to a wider pool of businesses.

This combined approach is particularly important for large, energy-intensive companies, such as steel producers. Previously, these firms were set to be excluded from the new subsidies because they were already recipients of the carbon allowance reimbursements.

Why EU Approval Was Necessary

The European Union maintains strict policies to prevent member states from providing excessive subsidies that could distort competition within the bloc. The goal is to create a level playing field for all businesses operating in the EU. Because Germany's plans involve substantial government spending to support specific industries and projects, they required formal approval from the European Commission to proceed.

China's steel exports hit a record high in December as producers rushed to ship metal ahead of a new export licensing system set to begin in 2026. This export boom starkly contrasts with weakening steel demand inside China, which continues to be dragged down by a prolonged property market crisis.

Data released Wednesday by the General Administration of Customs shows the world's largest steel producer shipped 11.3 million metric tons in December, the highest volume ever recorded in a single month.

Export Rush Driven by Regulatory Changes

Beijing's plan to implement a licence system from 2026 is designed to regulate steel exports, which have prompted a growing protectionist backlash from other countries. Analysts note that some exporters accelerated their shipments before January, fearing the new requirements could impact future trade.

For the full year, total steel exports climbed 7.5% from the previous year to an all-time high of 119.02 million tons. This record was achieved even as more countries erected trade barriers, arguing that the influx of Chinese steel was harming their domestic manufacturers.

Domestic Demand Remains a Weak Point

Despite the strong export performance, China's internal steel consumption is struggling. The country's ongoing property market woes continue to suppress demand for construction materials.

According to a state-backed research agency, China's steel demand is forecast to decline by 1% this year, following a 5.4% drop in 2025.

Iron Ore Imports Also Hit Record Levels

In a related trend, China's iron ore imports also reached a record high last year. This was driven by steel mills replenishing low inventories and a need for raw materials to support the massive volume of steel exports.

Chinese steelmakers have maintained low inventories since late 2022 as the property crisis strained their cash flow. However, with robust export orders, the demand for iron ore, a key steelmaking ingredient, remained resilient.

December imports rose 8.2% from the prior month to 119.65 million tons, a monthly record. This brought the total for 2025 to a record 1.26 billion tons, an increase of 1.8% from 2024.

Outlook: Price Pressure on Iron Ore Looms

Looking ahead, the iron ore market may face headwinds. Bai Xin, an analyst at consultancy Horizon Insights, noted that global iron ore supply is projected to grow by 2.5% in 2026.

Shipments to China are expected to increase by 36 million to 38 million tons, which is likely to put pressure on prices this year.

NO CURRENT 'MERCHANT ⁠ACCEPTANCE AT SCALE'

HIGH-FREQUENCY TRADERS DOMINATE MARKET

Source: Reuters

U.S. retail sales surged more than expected in November, signaling that the economy finished the fourth quarter on solid footing. But behind the strong headline number, analysts are pointing to a growing concern: a "K-shaped" economy where spending is increasingly driven by wealthy households while lower-income consumers fall behind.

The Commerce Department reported on Wednesday that retail sales climbed 0.6% in November, a significant rebound from the previous month's revised 0.1% decline. This performance, which beat the 0.4% rise forecast by economists, suggests robust momentum. On a year-over-year basis, sales were up 3.3%.

November Sales Beat Expectations Across Key Sectors

The rebound was broad-based, led by a strong recovery in vehicle sales. The data release, which is catching up after a 43-day federal government shutdown, showed notable gains in several categories:

• Motor Vehicles: Receipts at dealerships jumped 1.0%, reversing a decline from October that followed the expiration of electric vehicle tax credits.

• Building & Garden: Sales at building material and garden equipment stores surged 1.3%.

• Recreational Goods: Sporting goods, hobby, and book store sales vaulted 1.9%.

• Clothing & Online: Clothing store sales increased by 0.9%, and online retail grew by 0.4%.

• Food & Drink: Sales at bars and restaurants, the report's only services component, rose 0.6%.

However, not all sectors saw growth. Sales at furniture and home stores slipped, while electronics and appliance store receipts remained unchanged.

The "K-Shaped" Reality: Who Is Actually Spending?

Despite the positive overall figures, economists are highlighting an economic divergence. The spending boom appears to be powered by higher-income households, while lower-wage workers and recent graduates grapple with a sluggish labor market and rising costs for essentials.

This "K-shaped" trend became more pronounced in the last quarter. Food prices, for instance, saw their largest increase in over three years in December, disproportionately affecting lower-income budgets. Analysts attribute some of this price pressure to President Donald Trump's import tariffs.

Michael Pearce, chief U.S. economist at Oxford Economics, noted that upcoming tax policies could widen this gap. "Heading into tax refund season, the new tax law will boost refunds the most for higher-income groups," he explained, adding that the combined effect of tax cuts, spending cuts, and tariffs "will be negative for the real incomes of the lowest-income households."

Policy Debates and Housing Market Pressures

In response to rising living costs, the Trump administration has proposed several measures, including purchasing $200 billion in mortgage bonds and capping credit card interest rates at 10% for one year. However, banks and financial institutions have warned that a rate cap could restrict access to credit for consumers.

Meanwhile, the housing market faces its own affordability challenges. A separate report from the National Association of Realtors showed that sales of previously owned homes jumped 5.1% in December. But as Ben Ayers, senior economist at Nationwide, pointed out, a persistent lack of supply is likely to drive prices higher, counteracting the benefits of lower mortgage rates.

Inflation and Fed Policy Outlook

The economy's resilience is strengthening expectations that the Federal Reserve will hold its benchmark interest rate in the 3.50%-3.75% range at its upcoming meeting. This outlook is supported by inflation data that, while showing price pressures, does not indicate a runaway spike.

A report from the Bureau of Labor Statistics revealed that the Producer Price Index (PPI) rose 0.2% in November, following a 0.1% increase in October. Over the 12 months through November, the PPI was up 3.0%.

The increase was largely driven by a 0.9% rebound in producer goods prices, with energy accounting for over 80% of the rise. Wholesale food prices remained unchanged. Excluding volatile food and energy, core producer prices climbed 0.2%.

Looking Ahead: Labor Market Concerns Cloud Outlook

While the economy grew at a brisk 4.3% annualized pace in the third quarter, largely fueled by consumer spending, potential headwinds are emerging. The Atlanta Federal Reserve is forecasting an even stronger 5.3% growth rate for the fourth quarter, but a weakening labor market could threaten future spending.

Core retail sales—a measure that excludes cars, gasoline, building materials, and food services and aligns closely with the consumer spending component of GDP—rose 0.4% in November. This followed a downwardly revised 0.6% gain in October.

Economists at Wells Fargo noted that "the non-existent hiring environment has many households concerned about steady income prospects, while growing affordability challenges pressure discretionary purchases." As the government works through data backlogs from the shutdown, a clearer picture of inflation and consumer health will emerge, but the underlying split in the U.S. economy remains a central theme for the year ahead.

Just two weeks into the new year, President Donald Trump has initiated a series of disruptive actions, including claiming control over Venezuela, escalating threats to seize Greenland, and deploying masked immigration agents onto American streets. This surge of activity comes as voters prepare for midterm elections that will decide control of Congress.

Even for a presidency known for chaos, the recent turmoil is notable. The administration is also pursuing an unprecedented criminal investigation into the Federal Reserve, a cornerstone of the U.S. economy. Each move carries significant risks, from foreign entanglements to undermining the nation's financial system, yet Trump continues to press forward, unsettling even some Republican allies.

"The presidency has gone rogue," said Yale University historian Joanne B. Freeman, calling the situation something "we haven't seen in this way before."

Trump, however, appears unfazed by the potential consequences. Speaking in Detroit on Tuesday, he expressed confidence in his position. "Right now I'm feeling pretty good," he stated, during a speech intended to highlight the economy. During the event, he also attacked Federal Reserve leader Jerome Powell for not lowering interest rates, saying, "That jerk will be gone soon."

Trump Takes Aim at the Federal Reserve

While Republican leaders have largely stood by Trump, his move against the Federal Reserve has created new fractures. The issue came to a head when Powell disclosed on Sunday that the Fed was facing a criminal investigation regarding his testimony about the central bank's building renovations.

The Justice Department has previously pursued charges against Trump's adversaries, including former FBI Director James Comey and former national security adviser John Bolton. However, targeting Powell, who oversees the nation's monetary policy, appears to be a step too far for some conservatives.

Fox Business host Maria Bartiromo, typically a staunch Trump supporter, offered a rare critique. "It just feels like most on Wall Street do not want to see this kind of fight," she said on her show. "The president has very good points, certainly. But Wall Street doesn't want to see this kind of investigation."

The Federal Reserve's role is to manage the economy by setting interest rates. Trump insists they should be lower, but interfering with the institution's independence could backfire and lead to higher borrowing costs.

Aggressive Moves on the World Stage

Simultaneously, Trump has expanded America's involvement in complex foreign affairs, a move that seems to contradict his "America First" campaign promises.

The most significant action was the U.S. military operation to remove Venezuelan President Nicolás Maduro. While Trump initially cited Maduro's alleged role in the drug trade, he has since framed the intervention as an economic opportunity. He announced that the U.S. would control some of Venezuela's oil sales and that the country would be run from Washington, even posting a meme declaring himself the "acting president of Venezuela."

Trump has also issued threats toward the leadership of Cuba and Iran. In another surprising move, he insisted the U.S. will control Greenland "one way or the other," a stance that strains relations with Denmark, a NATO ally to which Greenland belongs.

"NATO becomes far more formidable and effective with Greenland in the hands of the UNITED STATES," Trump posted on social media Wednesday. "Anything less than that is unacceptable."

Domestic Tensions Rise Over Immigration Raids

At home, the administration's immigration crackdown continues to fuel confrontations. In Minneapolis, a federal agent shot and killed Renee Good, a 37-year-old mother of three. Officials claimed the U.S. Immigration and Customs Enforcement officer acted in self-defense, but local officials have disputed this account based on video evidence.

The incident followed Trump's decision to dispatch 2,000 immigration agents to Minnesota in response to fraud reports within the state's Somali community. On Tuesday, Trump defended the crackdown, stating the administration was targeting "thousands of already convicted murderers, drug dealers and addicts, rapists, violent released and escaped prisoners, dangerous people from foreign mental institutions and insane asylums, and other deadly criminals."

These actions have created "chaos, confusion and uncertainty," said Cleveland Mayor Justin Bibb, who leads the Democratic Mayors Association. "The ICE raids in Minneapolis have really shocked the consciousness of many of my residents... People don't feel like the world is getting better."

Voters to Deliver Verdict in November

With midterm elections approaching, voters will soon weigh in on Trump's leadership. Democratic campaign officials are focusing their messaging on the economy, where public opinion remains negative despite the president's positive assessments.

According to a January poll from The Associated Press-NORC Center for Public Affairs Research, just 37% of U.S. adults approve of Trump's handling of the economy. His economic approval, once a strength, has been low throughout his second term.

"Donald Trump's visit to Michigan puts a glaring, unflattering spotlight on how he and House Republicans have failed to address the affordability crisis," said Rep. Suzan DelBene, who leads the Democrats' House campaign arm.

Some progressive activists, however, are frustrated that the party isn't focusing more on what they see as Trump's unprecedented power grabs. Ezra Levin, co-founder of the protest group Indivisible, warned that Trump's actions could worsen. "Authoritarians don't willingly give up power," Levin said. "When weakened and cornered they lash out."

Despite the criticism, Trump insists he is fulfilling his campaign promises, and his allies in Washington remain united behind him. Kiersten Pels, a spokesperson for the Republican National Committee, predicted that voters will reward the party in November.

"Voters elected President Trump to put American lives first — and that's exactly what he's doing," she said. "President Trump is making our country safer, and the American people will remember it in November."