WEEKLY COMMENTARY

November 1, 2005

Changing Course

By Theodore Butler

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

There were an usually large number of news reports and articles that followed the release of my last article, "A Surprise Silver Endorsement," which dealt with the Silver Users Association’s (SUA) opposition to the proposed silver ETF. Most of these reports concurred with my take that this confirmed how little silver was available for investment. For this, I am gratified. I’m less pleased with the fact that none of the many reports indicated that my article was what caused these reports to be written, although there was a reference cited in one article.

I’d like to get something off my chest. I’ve never understood why widespread plagiarism is tolerated in the investment-writing world. It is certainly not tolerated in any other venue. Let a student at any level, from high school to graduate school, turn in a research paper without citing source information and a failing grade is the least that will result. Let a journalist use another’s work without acknowledgement, and he will be dismissed. I just learned from today’s newspaper that it is considered a cardinal sin for one comedian to steal another’s joke. What is it about investment writing that permits the theft of intellectual property?

I’m not complaining about someone learning what I am attempting to teach. I want people to learn - that’s why I write. And that’s why I’ve written for free on the Internet. But I don’t want anyone to steal my work and then pass it off as his own original research, when it’s not.

In the case of the article about the SUA and the silver ETF, it’s easy to prove my point, although this is hardly a unique case. The Internet is a giant time-stamping device. None of the articles in question predate mine; all postdate my article. The SUA didn’t suddenly make the announcement on October 10^th, the date of my article. The SUA first made its position clear months before, in its July newsletter. I explained in my article that I only became aware of their position because friends and readers sent me e-mails about it and I wrote about it in my Tuesday article.

It would strain credulity to think that the articles postdating my article were just coincidental, especially considering they all basically agreed with my conclusion. This is basically an issue of integrity and morality, of taking something that doesn’t belong to you. I would no sooner plagiarize someone else’s work than I would go on a shoplifting spree or steal from a neighbor’s home.

Having said all this, I would like to point out that the SUA has blundered badly in its public handling of this ETF issue. Not in two decades of observing them, have I seen them handle an issue so poorly. In the "old days" they would have put the ETF quietly to rest, with nary a public utterance. I think the chances are good that they’ll kill the ETF with their backroom dealing and lobbying, but their public relations effort backfired completely. Their blunder, of course, is your gain, as a more compelling endorsement for the true state of the silver market is hard to imagine.

I’ll let you in on a little secret. I’m not so sure it would be all peaches and cream if the silver ETF were approved. Oh, I think it would have a bullish effect on the price all right, but if enough silver was bought and the price reacted strongly enough, it could turn out that the authorities who approved it would panic and change their minds, ordering a forced liquidation. That would not be good, in my opinion. I guess you have to be careful what you root for, because you just may get it. In any event, the silver market will do fine, with or without the ETF.

For a variety of reasons, I have decided to change course on my weekly Internet articles. I have indicated a desire to do so in the past and I’d like to explain why. I don’t think most people know this, but there never was any profit motive behind my Internet articles, other than attempting to end the silver price manipulation. I got paid and expect to continue to get paid for writing articles for Investment Rarities’ customers. Most of those articles were then made available on the Internet, in addition to many others. The Internet distribution was basically a public service.

While I take full responsibility (pro or con) for the content of the articles, IRI should be given full credit for underwriting all costs and providing all technical assistance associated with maintaining the Internet service. It never was, nor was intended to be, a revenue source for them. Basically, Jim Cook put the articles up as a favor to me.

I do expect new articles to be posted after they have been distributed to IRI clients, but do not foresee that will be on a weekly basis. I want to get away from running commentary on the COTs, as that is interfering with my private efforts with friends and close associates, but I will comment on special occasions. I have also prepared several articles that are more controversial in nature, that I feel would be inappropriate to ask IRI to post. Those will be released on my website at what I deem is the appropriate time.

Finally, I apologize for falling hopelessly behind in responding to e-mails. Hurricane Wilma was the final breaking point. I read everything but don’t have the time to respond to but the very few. The sad part is that the more involved and thought out the correspondence I receive has the least chance of being answered due to time constraints. Those requests that can be answered in a word or sentence stand the best chance of reply.