Suppress German silver (3)
I believe the answer is:
Here is my best explanation:
'suppress' is the definition.
'german silver' is the subsidiary indication.
'german' becomes 'g' (abbreviation).
'silver' becomes 'ag' ('Ag' can be a synonym of 'silver').
(Other definitions for gag that I've seen before include "Muffle with slang joke", "Silence the joke", "A palindromic joke or muzzle", "Put a muzzle on the joke", "Palindromic muzzle", "Kind of muzzle or informal joke", "Joke; choke", "Stop the mouth with a joke", "Humorous anecdote or remark" and "Palindromic muxxle".)