April 2001

In this interview James Cook tries to turn up the heat on silver analyst Theodore Butler.

Cook: Since we first talked about silver, the price has dropped 50 cents per ounce. What’s causing that?

Butler: The sellers have been more aggressive than the buyers. specifically, the paper short sellers, the technical hedge funds on the COMEX, have sold short about 150 million ounces of paper silver.

Cook: Could anybody see this coming?

Butler: I don’t know about seeing it coming, but it’s not that unusual. It’s clear to me that short-term price movements in gold and silver are set on the COMEX between the dealers and the funds. It certainly has nothing to do with the real supply and demand in the metals.

Cook: In the past you’ve claimed that short sales are quite bullish. Are they?

Butler: Well, a short sale, like any sale, is a price depressant when it is established, but all shorts have to ultimately be covered, or bought back. It is that inevitable buy back that gives short sales a bullish aspect. At this moment they are heavily established in silver and gold.

Cook: Listen, people are buying silver to make a profit. They want gains. Are they going to get the big profits that you promise?

Butler: I hadn’t realized that I had promised anything. I hope people don’t invest hard earned investment capital on my, or anyone else’s promise.

Cook: What do you mean? These bullish reports on silver sound like a promise to me.

Butler: They’re not. I don’t want people to invest in silver on my promise. That would be foolhardy. I don’t offer promises, I offer research and logic. I list facts and figures. I try to use common-sense analysis, and I strive mightily to get folks to use their own common sense. I’m not interested in getting people to buy silver because I say so. I want people to verify, or challenge my analysis, and make up their own minds. I’m no pied piper. If people use their brains, and look at the silver situation objectively, then I think they will buy silver, because of the tremendous potential it offers.

Cook: The silver price has been pretty flat for a dozen years. The last thing any silver buyer wants is to wait another dozen years. When is something going to happen?

Butler: The question of when is the question most often asked me. Let me be clear - I don’t know. And the reason I don’t know is because the answer is unknowable by me or anyone else. I’m not a spiritualist or a mystic. I’m a commodity analyst. As long as the current supply/demand deficit continues, it’s just a matter of time until we get a lift-off in prices. I don’t see how that can take years. To me, it’s days, weeks or months. Let me confess something. Everytime I write an article, or do an interview, I feel it could be a wasted effort, because the price will have exploded before the article or interview makes it into print. No kidding - that’s how I always feel. But, I don’t want folks buying on my feelings. I want them to buy real physical silver, for the long haul, because they have thought it through. If my work has aided them in that thought process and action, then that’s great.

Cook: If you can’t say when, can you say how?

Butler: How is the silver price going to move once it starts moving? That’s one I think I have the answer to. Big and fast. The when part won’t matter, if you have already established your position. When will only matter if you’re not in when the move commences. That’s what the price history and current fundamentals of silver suggest.

Cook: Can you explain that a bit more? I mean, what would get it started and how fast would it move?

Butler: Silver is the most manipulated market in the world. The price will explode once the manipulation ends. Leasing has to end. When leasing ends, the silver price will be set in a completely different range, in a hurry.

Cook: Care to put a number on that?

Butler: I think it’s possible that we could double or triple. Maybe in weeks. If it goes up slower and longer than I expect, no harm done. But we will get to the real free market clearing price to balance current production and consumption. That you can count on.

Cook: Haven’t you said as high as $50 to $100 an ounce?

Butler: Yes, and I stand by that. But that’s not immediate. That will take several years.

Cook: The big trading funds have successfully depressed the price with their short sales. This is big money at work speculating against silver. What can possibly break the hold they have on silver?

Butler: The short answer is the law of supply and demand. These short sales that these funds have made are pure paper sales. There is no real silver backing these short sales. While the short sales do depress the price temporarily, the law of supply and demand adjusts to the new lower price, by increasing demand and reducing supply, over what would have otherwise occurred. The cure for low prices is always low prices. Besides, these paper short sales are incomplete transactions. They must be bought back at some point. I say that point should be explosive.

Cook: There are other factors at work besides short sales aren’t there?

Butler: Yes, people have to realize that the silver market, like any market, is like a three-ring circus. There are different dramas and suspense developing on all sorts of different levels. You’ve got the COMEX, the leasing, the Silver Users Association, and ten other things going on, all at the same time. While it may appear that such powerful forces will stay in control forever, the silver investor has the ultimate trump card. He has the law of supply and demand on his side. The most powerful forces in the world are no match ultimately, against the cold, hard fact that we are consuming more silver than we are producing. That must end. That is not a promise, that is a simple fact. The silver market must come into balance between current production and current consumption, which it has not done for 50 years. And the only possible way for the silver market to come into balance, on a current production-consumption basis, is through much higher prices. In a free market there is no other way.

Cook: But what about an economic slowdown? A recession like we have starting now can’t be good for the silver price, can it? Won’t industrial demand slacken in a slowdown?

Butler: Of course, industrial demand for silver will slacken in a slowdown. That’s because we use silver in so many products. I don’t think there is a commodity that is used in more applications than silver. It is part of modern life. A recession doesn’t necessarily mean that the price of silver will go down. Demand is only half of the equation. Supply appears to be slowing down faster. Aside from pure silver mines closing, such as Sunshine Mining recently, please remember silver is produced as a by-product to other metal mining. This accounts for 75% of silver mine production. Did you think that only silver demand would suffer in a recession? What about copper, and lead, and zinc? What about gold jewelry? My point is that it doesn’t matter if silver demand drops if supply is also dropping. The deficit will remain.

Cook: But demand could drop a long way.

Butler: Who cares if total silver demand drops from say 800 million ounces to 600 million ounces, if supply falls as much, or more? The key to silver is the deficit. In a slowdown, I think the deficit will increase. I don’t think a recession or depression is an enemy of the silver price. Besides, recession or not, nothing will reinstate the billions and billions of ounces consumed from inventories over the past half century. That’s gone forever.

Cook: Frankly, I can’t see anything on the horizon that’s going to trigger a price explosion in silver. Won’t it take some big precipitating event?

Butler: I guess you haven’t been reading my stuff. Frankly, I can’t see anything that can prevent a price explosion. This market is structured to explode. The precipitating event is unimportant. I could probably list 20 possibilities, but it doesn’t matter what the event is. What matters is that the market has to explode, because that’s the way it is currently configured. We have a verified long-term physical deficit. We have the largest short position ever seen in history. We have supply, at the margin, coming from an unsustainable source - silver leasing. We have the lowest prices in history. We have more people and money and credit in the world than ever before. We have the lowest world inventory in hundreds of years. A friend of mine once remarked about the silver market that it was like a swimming pool filled with gasoline, with people walking around the edge, flicking lit matches. Or, to quote Bunker Hunt, 30 years ago, "this is an accident waiting to happen".

Cook: I know you don’t focus much on other economic forces, but it seems to me that a drop in the dollar will bring gold to life and silver will be pulled along with it. I mean, the dollar and gold are opposites and silver has always risen with gold, at least in my lifetime. What’s your opinion?

Butler: I can see gold and silver rising in tandem. They have a history of moving together. And they certainly share many things in common, as far as market structure. I mean such things as leasing, a big short position, and manipulation. But silver’s market structure is much more extreme, in that we have been destroying silver inventories for 50 years, while we haven’t destroyed any gold inventories, just reconfigured them. Gold is set to explode, but not like silver.

Cook: Didn’t gold move silver along in the price runnups of twenty and twenty-five years ago?

Butler: Perhaps. I can see a move in gold as a catalyst in possibly starting the silver lift-off, but I have trouble with the dollar connection. I mean, what is the dollar going to weaken against? Current economic conditions are truly globally interconnected, and what paper currency is going to be a refuge from the dollar? What paper currency do you plan to run to? What foreign paper currency do you think regular folks will flock to? I have to tell you, I don’t picture myself buying a foreign currency in any event. I’m not saying I won’t, but if I do, it will be something I never did before. I’m not saying the dollar will not weaken. I’m saying I don’t know after 30 years of looking at them, just what moves the currencies. I’ve heard 10,000 theories and explanations about the currencies. They all made sense, and then again, none made sense. I’m saying I don’t see some strong connection. I look at the supply demand fundamentals of the real commodity. My analysis says silver is way under-valued, unsustainably under-valued. If you, or anyone else, says silver is undervalued for reasons other than the core fundamentals, I say great, that’s a bonus.

Cook: Well, your currency analysis isn’t overpowering me. If you create too much of anything it loses value. We’re flooding the world with dollars and I believe it’s poised to fall. It doesn’t matter how good or bad other currencies are when you glut the world with dollars. It’s our weakness rather than their strength. The dollar can lose value against all of them. If the economy continues to weaken, the dollar will likely follow.

Butler: You might be right and if you are, it certainly would impact gold and silver.

Cook: I’ll go so far as to say it’s likely to be the chief cause of a price explosion in precious metals.

Butler: I question that, but let’s move on.

Cook: You say that leasing isn’t legitimate. If you lease a car and then sell it, that’s illegal. But if you have leased silver you can pay it back with the exact type bars. Silver bars are all the same. They’re fungible. That’s what makes repayment different than returning the car at the end of the lease. Am I right?

Butler: Yeah, I get that response a lot. So, let me just address that point, and not go on with all the reasons that metal leasing is fraudulent and manipulative. I’ve been a commodities guy for 30 years. I know what fungible means. One bar is the same as another. But, I’m saying something else. I’m saying that it doesn’t matter that all silver bars are substitutable for each other, because all silver bars are rapidly approaching extinction. The public evidence clearly confirms that we are extinguishing, and have extinguished, most of the silver mined throughout history. By "most", I mean way over 90%. The silver is gone. Over 90% of the silver ever taken out of the ground over the past 5000 years has been consumed. Where will the silver come from to pay back a billion ounces borrowed? No one can verify more than 150 million ounces in the world, yet we have obligations to repay many times that amount. Fungibility is a moot point. You can’t pay back with something that doesn’t exist. And spare me the fairly tale that the miners can take it out of the ground. That future silver is already spoken for - by 6 billion world consumers.

Cook: Frankly, it embarrasses me whenever you call leasing fraudulent and manipulative. It’s a very serious charge. Couldn’t we cool the rhetoric on this issue?

Butler: Jim, I know this is a very serious charge, but I am certain that, in the end, this business of metals leasing will be shown to be the scam I claim it is. I know folks are a bit taken back with the words I use, but I have complete confidence that, in retrospect, my words will look understated. What’s kind of funny is that if my allegations are correct, my strong words will be proven to have been what everyone should have been saying. Why don’t you reserve judgement on whether I should cool the rhetoric. Besides, we have strong libel and slander laws in this country. If the wrongdoers don’t like my words, let them sue me.

Cook: You’re calling silver leasing fraudulent. Well, I’m not going to use that terminology. I’ll ask the question this way. You’re calling silver leasing wrongheaded. The biggest financial companies in the world aggressively pursue this strategy and stand behind it. Where do you get off calling it bogus?

Butler: You know Jim, I’m going to continue to use strong words. I mean fraudulent and criminally manipulative. Based upon my research and investigation and reasoning, I think this is the biggest blunder ever made by the financial establishment. I’m sure of that, to my very core. It is not possible for me, knowing what I know, and being the kind of person that I am, that I could not publicly attack this fraudulent practice. Thanks to the Internet, I’ve been able to spread that message.

Cook: What exactly are your credentials for making these sweeping accusations?

Butler: Credentials? You mean like a title, or something? Why would that matter? If I was a former US Senator or astronaut, would that make my message more legitimate? I’m a long-time commodities broker and analyst. My credentials are the facts, figures and logic that I use. If what I say makes sense, great. If it doesn’t, great. You’ve published my work for six months. You’ve read and reread everything I wrote for the past 4 years. You’ve read and published the very specific accusations I have made. Let me ask you a question. Have you ever, in your lifetime, seen such public accusations against such public institutions go unchallenged? Don’t you think someone should have sued me?

Cook: That’s why I have to use disclaimers on all of your stuff. You are all alone in the world taking on the commodities exchanges, the Silver Users Association, the mining companies, the brokerage firms and the bullion banks. Did you ever think that you might be the one that’s out of step?

Butler: Ever think of it? How about a billion times a day, everyday. You don’t think I know I’m out of step with the people I accuse? I’m saying they’re doing something wrong, what are they supposed to say, other than they’re not?

More than anyone on the face of this planet, I am my own most extreme critic.

While I don’t seek out personal popularity, I don’t relish the thought of being wrong in public view. This is serious stuff. I’ve looked and keep looking, for where I might be wrong. I haven’t found it yet.

Cook: Don’t you think that leasing is something that simply got too big. It isn’t fraud in the sense that somebody set out purposefully to cheat anyone. It’s a mistake rather than a crime isn’t it?

Butler: I agree that leasing was a mistake from the outset. It wasn’t designed to cheat anyone. But, it is the very refusal to acknowledge this mistake and end this fraudulent and manipulative process that brings in the question of criminality. Because there is so much potential liability for those involved in this scam, that I am convinced there is now an active cover-up to avoid liability. In big institutional scandals it always comes down to "what did you know and when did you learn of it?"

Cook: Why doesn’t anyone in the silver establishment ever concur with you?

Butler: I am an outsider. I am not part of any of these organizations. Who else but an outsider could make such accusations? Certainly you didn’t think an insider was going to spill the beans? No one is ever going to voluntarily admit that they were part of an ongoing fraud and manipulation. The people and organizations who are participating in this scam can only pretend that everything is just fine. Right to the very end. They have no choice.

Cook: Let’s face it, all these organizations dismiss what you say and probably consider you to be a crank. Have you ever heard from any of them?

Butler: I’ve had limited private contact, but that’s because I insist everything be done in public, out in the open. But I’m not so sure of the crank part. I make my case on solid facts and logical reasoning. Who do you see refuting my allegations? It seems to me, if I were a crank, they would be able to persuasively refute my case. You’ve been sending my stuff out for six months. You get all sorts of questions and comments on the things I’ve said. Have you come across anything that negates what I’ve written and said?

Cook: Not so far. But I’ll continue to look. I must admit you know more about this subject than anyone. I guess I wouldn’t be sending your stuff out, at great expense, if I thought it was wrong or if I saw there was a legitimate challenge to it.

Butler: Good.

Cook: Maybe you’re just a voice in the wilderness and nobody’s heard you yet. Or maybe you just make them yawn. I mean, you’re telling the world that something of enormous magnitude is terribly wrong.

Butler: Look, I didn’t intend to ride on a white horse when I got involved in this over 15 years ago. It just happened. The more I looked, the more it smelled like manipulation. I’m doing what I can do to end it that’s all.

Cook: I’m always astonished when you say there’s more gold in the world than silver. Can that really be true?

Butler: There’s ten times as much gold verified to exist than silver.

Cook: But isn’t there silver that’s not being counted?

Butler: Yes, there is silver in the world that isn’t being counted, but it’s the same with gold. Remember, all the gold is still with us but the silver has been consumed. There’s been a big deficit every year for the past fifty years. At some point silver inventories are going to zero.

Cook: Is there a difference between silver leasing and gold leasing?

Butler: Silver leasing is riskier. It’s far more dangerous than gold leasing. There’s enough gold in the world to somehow pay back the gold leases. It would take much higher prices for gold and a lot of manipulation and pain, but it’s at least conceivable that they could be paid back. With silver the supply just isn’t there. That’s the big difference between gold and silver. The gold is still in somebody’s vault. The silver us used up and gone.

Cook: Well, maybe they could pay it back with new silver they mined?

Butler: You’re missing the crucial point. There’s the equivalent of two years production of silver leased out and sold. If you try to pay back this much silver to the original owners, the industrial users won’t be able to get any of that silver. That’s the exact silver they buy every year to use in their products. The silver can’t be paid back. If it is, then industry gets none. Do you see how that will drive up prices? The people who leased the silver out expect to get it back. Yes, it’s crazy and unworkable, but do you see how bullish it is? Do you see it’s just a big fiasco waiting to happen? It can only blow up in their faces and send the price of silver higher.

Cook: What will the stockholders of these mining companies say when the price of these metals go up and the mining companies can’t realize the higher prices because they’re paying back loans?

Butler: They will be terribly unhappy and they will put tremendous pressure on management to get rid of the problem.

Cook: It just doesn’t make sense that these people couldn’t see the trap they were walking into. Maybe they can get out of it by just paying cash?

Butler: No, that’s not a provision. If you were not going to get your metal back, why would you lease it? Why not just sell it and use the money yourself. Instead of a 1% lease rate you could get 7% on your money.

Cook: Another thing you’ve said is that the big short sales on the COMEX are not in accord with the original intent of commodity law and should be stopped. What do you mean by that?

Butler: The Commodity Exchange Act (CEAct) clearly dictates that speculators should not manipulate or influence prices due to large positions. It is the law’s number one concern. For that reason, the CEAct dictates that speculators hold positions, basically, that are smaller than what the average real miners and consumers produce and consume. The COMEX clearly violates this law by allowing speculators to hold much bigger positions than the biggest producers mine in a year. The most recent Commitments of Traders report from the Commodity Futures Trading Commission (CFTC) shows four or less traders net short 37% of total futures positions, or 130 million ounces. That means that 1, or 2, or 3, or 4 traders are permitted to be short an amount of silver which is greater than all verifiable silver in existence. The COMEX is clearly violating the law, and their lap-dog, the CFTC, doesn’t say squat. It’s outrageous.

Cook: But how is that ever going to change?

Butler: Governments are always reactive not proactive. It will be the law of supply and demand that will end this manipulation. After the horse is gone, the CFTC will come in to nail the barn door shut. I just hope it comes out just how utterly incompetent the CFTC was this past 15 years. They are a disgrace.

Cook: Some people claim there’s a lot more silver in the world than you’re saying there is. What do you say to them?

Butler: Jim, haven’t we already been there and done that? Look, if someone says there is more silver in the world, on a verified basis, than 125 million ounces, let them prove it. It’s real simple. Just show me. That always shuts them up.

Cook: OK, but why does everybody seem to believe there’s so much silver in the world?

Butler: That’s a good question. I think it’s because of human nature. The most known thing about anything traded is its price. The current price of anything is known by everyone. When you see the price of silver remain flat and depressed for years and years, it’s normal for folks to assume there is a surplus or big quantities available. It’s perfectly natural. We assume we always have free markets, and the price is never wrong. A low price means there’s plenty. We have all been conditioned to think that way. But that is not how you think if you’re an analyst. An analyst looks for cases where the price is wrong, where the price doesn’t reflect the true fundamentals. An analyst looks for disparities between price and value. That’s what drew me to silver in the first place. I saw that the price didn’t reflect the real fundamentals and value, and I became interested. The closer I looked, the more I could see what was really depressing the price - short selling and leasing. The folks who claim that there’s a lot of silver in the world are not bad people, they’re doing something very human - they are looking at the price and extrapolating from there. They are assuming the price is correct. They are investigating no further. A real analyst never assumes the price is correct. He assumes the price is wrong, either too high or too low, and goes about proving it. If he can prove a disparity between the current price and the real value, he has an opportunity. If not, it’s on to greener pastures. This is what analysis is all about. So, the next time someone tells you there’s plenty of silver in the world, just remember the old Wall Street saw - everyone knows the price, but very few know the value.

Cook: But can’t we just assume there’s a lot of silver coins in dresser drawers and in silverware sets around the world?

Butler: Look, the shortfall is almost 200 million ounces a year. That’s a lot of dresser drawers full of silver coins. It just isn’t enough to dramatically change things. And as you know, a lot of it has already been melted. They’ve been melting coins for twenty-five years.

Cook: The case you make for silver is incredibly bullish. If all the things you say are true, people should sell everything they own and buy silver. How come you’re the only one that says this? How come nobody else can see this?

Butler: Come on, Jim. You, obviously, see it. So do many others. There are 6 billion souls in the world, I’m not the only one bullish on silver. But, you have a good point about me being alone, if you’re talking about the excessive short selling and leasing manipulation. I don’t know how to answer that, but it’s something I think about constantly. I mean, I didn’t set out to be a big whistle blower on metals manipulation, it just happened as a result of my analysis. Based upon my background and experience, it just happened.

Cook: So you’re the lonely whistle blower?

Butler: Yes, but here’s what I really can’t understand. After the hundreds of thousands of words that I have written about this scam and fraud over the years, I am amazed that more don’t see it. I would never expect someone to come up with my analysis who didn’t have the same history and experience, but even without that specific background, I don’t understand how a reasonable person wouldn’t reach the same conclusion after it was explained to them. Or at least, vigorously attack my explanations and allegations. I guess it’s because we all have a basic fundamental belief in free markets, and my explanation is so alien to what free markets are about, that it gets rejected because of our bedrock beliefs.

Cook: I may believe it, but what am I supposed to tell clients who have seen silver drop in price?

Butler: I understand your frustration. No one wants to see something they invested in go down in value, even if it is only temporary, as I believe about silver. But I never said it couldn’t go down in the near term. I’ve been studying and fighting this manipulation in silver (and gold) for many years. That has given me a perspective different than most folks. The short term doesn’t matter, if you are a long-term investor. I’ve never said, "buy silver because this is the bottom". I’ve said buy silver now because it offers tremendous value and could explode at any moment. Catching the exact bottom is something we desire, but can very rarely achieve.

Cook: Anything else?

Butler: I’ve also said buy physical silver and don’t borrow money to do it. That’s because while I don’t know the day of lift-off, I do know that if you are not positioned before the day of lift-off, you risk not getting positioned at all. The risk of not being in outweighs the risk of a short-term decline. Silver isn’t going bankrupt. It’s not going to disappear. It has great value. With the price down even more, the disparity between price and value is even greater. It is a better buy and value here. I would like to see people look at this as a long-term idea. Put it away and forget about it. If you have more funds, buy more. If you don’t, OK. What you do have will reward you in the future.

Cook: A lot of people disagree with your advice on this point. In fact, one company advocates primarily owning silver on margin. What do you say to this argument?

Butler: You know one of the reasons I say to invest in physical silver on a fully paid for basis, is to gain that long-term perspective. That’s where the big profit lies. I think it is hard, or impossible, to hold a long-term perspective on anything if you worry about it on a daily basis. Our modern world is structured to bombard us with instant information, like no other time in history. It has made us all short-term oriented. But we also know that very few can profit on a short term or margin-trading basis. I say don’t even try, although I do try for myself because I’m a professional commodities trader. The biggest risk in trading silver on a short-term basis is selling too soon. Holding a physical position will aid in avoiding that mistake.

Cook: Well, it’s possible to lose money on silver if you pay for it all or if you buy it on margin. Look at the last few months. Do you recognize that people are concerned because silver hasn’t done much?

Butler: Let’s face it - I have publicly recommended silver for about 6 months, through your organization. It’s down, but this is a relative thing. If you have funds, you put them in something. If you are committing to something with a high profit potential then what has been better than silver? Not the stock market. In fact, if someone bought silver, instead of equities, that person would be happy now. If they sold stocks in order to buy silver, they’d be ecstatic. They’ll be more ecstatic as time goes on.

Cook: You make a very bullish case. But how do we really know how much silver industry uses? Who keeps these figures?

Butler: That’s not a big problem. There are accepted statistical services, like the Silver Institute, that keep pretty good tallies. I mean, I’m not compiling my own statistics, although I did at one time. All these services confirm the long-term deficit. Besides, the deficit is confirmed by the shocking decline in world silver inventories.

Cook: I tried to lift ten 100-ounce bars the other day. It’s almost 70 pounds. I can’t imagine that each day industry uses twenty thousand times this much silver. That’s an improbably high amount of silver. Are you sure this is right?

Butler: It’s heavy because you get too much for your money at these prices. Don’t worry, it won’t seem so heavy when it’s worth ten times as much. And not only does the world consume over 2 million ounces every single day of the year, between 300 to 400 thousand ounces are coming from inventories, primarily central bank leasing, every single day also. We are literally destroying and extinguishing hundreds of thousands of ounces of the tiny remaining world inventories on a daily basis because of the deficit. You don't have to be Albert Einstein to figure out that that can’t go on forever. That’s what makes silver such a great buy and value.

Cook: If the price rises, they could quit using silver couldn’t they?

Butler: Very few users will voluntarily quit using silver in a price rise. That’s because silver use is price inelastic. That is, there are few substitutes and the cost of silver is tiny in the finished product compared to total cost of the finished product. You really should be phrasing the question differently.

Cook: How so?

Butler: You should be asking what will happen to industrial silver users when silver is rationed.

Cook: Rationed?

Butler: Yeah, that’s inevitable. It is not possible to have a long-term current production-consumption deficit that doesn’t end in rationing. That’s basic economics. The only question is whether we do it by price, as should be in a free market, or some non-free market rationing scheme.

Cook: I must say that I’m a pretty good student of human behavior and you have turned out to be a rational and humble person who doesn’t lie or exaggerate. You seem well adjusted except for one thing. You get very jealous about your material if someone copies it. You also put a tremendously high value on your stuff. I mean you think it’s priceless. How realistic is that?

Butler: I’ve put a lot of time and effort into my analysis. I won’t stand by silently if someone tries to steal it in any manner. If someone thinks I’m all wet in my thinking, that’s fine. If someone just tries to claim it as his own, that’s not fine. Yes, I place a high value on my stuff because I try to write about what isn’t widely known. Most of the things I write about are uniquely original. Whenever you’re offering information that can make people a large potential gain, I think it has a high value.

Cook: Let me tell you one thing. In 1980 every customer I had was in the money. They had big profits. Since then it’s been up and down, but mostly down. I’m dying to make a profit for everybody once again. My company is not making any money here. We’re selling silver alright, but we’re plowing every cent we make into promoting and marketing silver. We’re doing our part to get people into silver. Do you think it could be a self-fulfilling prophecy?

Butler: Absolutely. The key to the silver market and when it will move comes down to the day there is not enough physical metal to meet industrial demand. That means those who own physical metal will then be in the driver’s seat. Those that own physical metal will own what’s most in demand. Those buying and holding physical silver will hasten that great day of price freedom. It’s really a win-win situation for all real silver investors. They get to be positioned in what will be the most sought after commodity on the planet, and they aid in ending the manipulation sooner. That’s a good deal.

Cook: Here’s a far out question. If silver becomes so scarce and valuable that defense industries and government agencies have problems getting it, could it be nationalized or called in like gold was in 1934?

Butler: I hate to think in those terms, but of course it’s possible. I would hope that we would let the rationing be resolved by price and markets since we purport to be a free-market country. But bureaucrats can’t be under estimated. But if that unfortunate event actually occurred, it would be at a much higher price.

Cook: Silver analyst, Jerome Smith once told me silver would someday be worth more than gold. Is that possible?

Butler: Sure, it’s possible. Anything can happen in extreme market conditions, but I don’t think it would be permanent.

Cook: Can you give me your final thoughts?

Butler: What more can I say. I can’t hit anybody in the head to get them to buy silver. If you’ve read the things I’m saying about silver and you still aren’t moved to buy it, I can’t make the argument any stronger. In my opinion, there will never be a more bullish coming together of factors for any asset than there is for silver today. It is quite literally bullish beyond our ability to fully comprehend. Nothing this good will ever stare you in the face again. Look at the facts. If you understand fully what I am saying about silver, you are going to own it.

• The best available silver item today remains the 90% silver coin bags. These coin bags have a $1,000 face value. You get 2,000 silver halves, 4,000 silver quarters or 10,000 silver dimes. There are 715 ounces of silver per bag. A bag weighs 55 pounds and is in the shape of a bowling ball. We ship them in half bags, registered and insured through the mail in plastic pails that weigh 28 pounds. The coins are all dated prior to 1965 when silver was eliminated from our coinage.
• 100 ounce bars. These bars were struck by various refineries over the past thirty years. To our knowledge no new bars are being struck. We hear the equipment to make them has been destroyed. That means we have to buy the bars from secondary sources. Surprisingly few are available and from time to time we can’t get any.
• BU Dimes and Quarters. These uncirculated bags of either Roosevelt Dimes or Washington Quarters have 725 ounces of silver. They are generally dated in the 1960’s. Here again, the supply is small.
• BU Kennedy Half Dollar Bags – These uncirculated silver coins were struck in 1964 only. A bag contains 725 ounces of silver. We can’t get many. A lot of these coins have been melted.
• Circulated Walking Liberty Half Dollar Bags. The Walker was struck from 1916 to 1947. These coins are mostly dated in the 1930’s and 40’s. They have some circulation wear, but still contain 715 ounces of silver. Walking Liberties are a historical coin and an excellent way to hold silver.
• Circulated Peace Dollar Bags – These coins were struck from 1921 to 1935. Most are still bright and shiny. Dates are primarily in the 1920’s. Any significant demand and the supply will dry up. A bag contains about 770 ounces of silver. These are beautiful coins and still reasonable priced.
• U.S. Silver Eagles – These one-ounce silver coins are newly struck by the U.S. mint. They have a face value of one dollar. They have a Walking Liberty on their shimmering surface and are big beautiful coins.
• Complete roll sets of U.S. Silver Eagles are sometimes available. This set includes one roll of coins for each year of mintage, from 1986 through 2000. There are 300 coins in 15 rolls of 20. These sets are hard to come by.

Call us now at 1-800-328-1860 and buy silver.

Sincerely,

James R. Cook

President

P.S. We have first-rate silver storage available at the Fidelity Bank in Edina, Minnesota, a safe and affluent suburb. The bank has a large, strong vault and the silver is insured for loss by a highly-rated insurer. The storage agreement exists between you and the bank. Your name is on the exact silver you purchased and it’s not commingled. Nor is it ever leased out or subject to any other games. It sits there until you instruct the bank otherwise. If you want to sell it, go look at it, have it shipped to you or go pick it up, you can. If you want to talk to the president of the bank, call me and I’ll give you his name and number. The minimum amount for storage is $25,000.

P.S.S. Some people have called to say they bought silver elsewhere and can’t get it. They paid for it and after two months they are still waiting. Remember that small dealers don’t have the buying sources that we do. John Kamin, the coin dealer and newsletter writer, claimed that nine out of ten coin dealers fail every decade. You need to be careful about who you give your money to and you need to be aware of security issues. Precious metals ownership must be kept on a strict needs-to-know basis. Nobody local should ever know you have it.

Investment Rarities Incorporated has prepared this material for your private use. Although the information in this publication has been obtained from sources which Investment Rarities Incorporated believes to be reliable, we do not guarantee its accuracy and such information may be incomplete or condensed. All opinions expressed in this publication are those of Investment Rarities Incorporated and are subject to change without notice. Predictions or projections can be wrong and financial advice can prove to be unprofitable. Gold and silver can go up or down in value. Gold, Silver and coins are not necessarily a medium appropriate for every individual. All rights reserved. ã 2001 Investment Rarities Incorporated.

Investment Rarities Incorporated has prepared this material for your private use. Although the information in this publication has been obtained from sources which Investment Rarities Incorporated believes to be reliable, we do not guarantee its accuracy and such information may be incomplete or condensed. All opinions expressed in this publication are those of Investment Rarities Incorporated and are subject to change without notice. Predictions or projections can be wrong and financial advice can prove to be unprofitable. Gold and silver can go up or down in value. Gold, Silver and coins are not necessarily a medium appropriate for every individual. All rights reserved. ã 2001 Investment Rarities Incorporated.