In Jim Cook's Archive


By James R. Cook

Almost all the human progress ever made has come because of the single-mindedness of one lonely individual. They scorned Henry Ford, ridiculed Edison and Einstein and burned Bruno at the stake (he took the fall for Gallileo). A writer recently questioned Ted Butler’s credibility because no other experts could be found to support him. The Silver Institute dismissed him because he was not a mainstream analyst. The pathetic drivel that comes from these so-called silver experts pales in comparison to the original, ground-breaking insights of Mr. Butler. Thank goodness he is a lonely individual.

The day before the Tuesday, April 13th price break, Mr. Butler conveyed to me in a private conversation that the big boys would probably smash the silver market soon. No other good way exists to get out of their outsized short position. “If it goes up from here, it could be a financial catastrophe,” he warned. As the big dealers buy back the futures contracts of the funds and speculators, they reduce their short position and get the monkey off their back. He claims this is incredibly bullish because he doubts they will go short again to the extent they have in the past. That means silver will be free to rise based on supply and demand factors alone.

I give these views a lot of credibility because, on the day before the price drop, Mr. Butler wrote the following commentary to our brokers. “It looks like we may be starting to get the long-overdue sell off in silver and gold, because of the lopsided condition of the COT (Commitment of Traders), where the dealers are heavily short and the tech funds are long. In fact, the COT has never been more bearish than it is now in gold, as we are at, by far, a record dealer short and tech fund long position. As I recently wrote, my speculation was that the dealers lured the tech funds into the record gold extreme to eventually cause a sell off in gold to drag down the silver. I say this knowing full well that silver has been weaker than gold recently.

“What’s important is that if we get a real flush out in both gold and silver, it will create the Mother Of the Mother of All Buying Opportunities in Silver (see MOABO? last October) Conditions in the silver physical market, as well as in the behind-the-scenes regulatory situation, are reaching critical mass, and this should be the last opportunity the dealers will have to close out shorts to the downside. If they are able to cover large numbers of contracts, it will be the most bullish development possible. It may get scary to the downside temporarily, but if this sell-off develops, it must be bought. If I’m wrong, it will be that we don’t get the sell-off.

“One thing is certain, with or without a sharp sell-off, silver is poised to move sharply and shockingly higher. The $3+ advance in the past few months is a baby step to what we will see.”

Ted Butler’s insights have proven to be far more accurate than any other silver forecaster or analyst. Most of the other silver commentary has been negative, arguing vehemently that silver would go down. I’ve been in the precious metals business for thirty-two years. I’ve been close to Howard Ruff, Jerome Smith, Kurt Richebacher, John King, Steve Puetz, Jay Taylor and Mark Skousen. I’ve been friends with Richard Russell, Gary North, Jim Blanchard, Doug Casey, Jack Pugsley, Harry Browne, Jim McKeever, Hans Sennholz and Murray Rothbard. All have been experts in their given areas. Yet, nowhere have I ever come across anyone who lives, breathes and understands silver like Mr. Butler. He’s way out in front of anyone else on the subject. Consequently, I have to give credibility to what he says. Most importantly, I’m comfortable passing on his viewpoint to our customers. That’s something I considered carefully. If silver had dropped to $3.00 as some were suggesting, it would have damaged my company, perhaps irreparably. So far, so good. Mr. Butler has been on the money and we look forward to more of the same. Nobody can be certain about the future and there are always risks, but we are clearly in the same boat with Mr. Butler and happy to be there.

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