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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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Ted Butler Commentary
April 30, 2014
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TRUMPING PAPER SILVER

For many years the world consumed more silver than was produced. It was called a consumption deficit. That stopped around 2006. The 10 billion ounces that existed in 1940 have been depreciated by 90% over the past 75 years. Even though industrial demand takes up to 90% of the silver mined or recycled, this demand does not exert the biggest influence on price. It is the other 10% that typically moves the price. The reason silver prices climbed to near $50 in April 2011 was due to strong investment demand for physical silver. The reason prices have declined since then is because of weak investment demand. The key to the future silver price depends upon investment demand.

A distinction must be made between silver futures and physical silver. While aggressive buying of paper futures contracts on the COMEX will cause the price to rise temporarily, that type of buying always ends with aggressive selling. Over the past 30 years, every time the hedge funds have purchased electronic contracts aggressively, the commercials (big New York banks) have sold short enough contracts to cap the price. The funds only trade leveraged paper for short term profit. There is an unlimited supply of these electronic silver contracts. However, real silver is both scarce and rare by almost every measure. While the commercials can sell short unlimited quantities of paper silver, there is no practical way of selling short physical silver. When physical silver investment demand revives, only the sale of real silver will satisfy that demand, not paper contracts.

Around 100 million ounces are available for investment demand. Numerous members of the world’s financial elite could write out a check for that amount and absorb all the new silver. Just because no one has recently tried to acquire a big chunk of silver, doesn’t mean no one will try. In fact, history suggests it is only a matter of time before someone big moves into silver. When paper silver is overturned by one buyer or many buyers, the price will make up for years of mispricing.

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