In Jim Cook's Archive


Like so many of our clients, I’ve made a lot of money in silver.  Is it time to take some off the table?  I have a friend (former stockbroker) who constantly tells me to sell.  In that respect, I have sold a couple of small positions in silver mining stocks.  However, that’s only a fraction of my silver holdings.  I’m hanging on to the rest.  I may never sell my coins and bars (unless the price goes insanely high).

However, if silver drops dramatically in price and my profits evaporate I will really have egg on my face.  It would jeopardize all my goals and cause painful second guessing.  I’ve been there and done that.  It’s no fun.

I did one thing right.  Back in 1974 I sold my Mom and Dad 3½ bags of 90% U.S. silver coins.  One day in 1980 when silver was $48 an ounce they asked if they should sell.  I took them out of their silver.  They got $100,000, which lasted them the rest of their lives.  I also sold my silver.  My traders and other employees thought I’d lost my mind.  They were quite critical.

Based on that experience you would think I’d be planning a repeat performance.  However, I was flying blind back then, whereas today, I’m relying on the advice of Ted Butler.  He’s been right as rain for over a decade.  His main premise is still intact.  Until the oversized short position is bought back and covered silver looks like it has a healthy upside.  By selling now I could miss the price explosion that would come from massive short covering in the midst of a silver shortage that causes industrial users to unleash panic buying in the midst of an investor stampede into silver.  Wow! I think I’ve convinced myself.

One thing I’m not going to do is listen to advice from all the new silver commentators.  Almost none of these newly minted experts mention the short position as a reason for silver’s rise.  In other words, they don’t know much.

Another concern is the growing hubris in the world of gold and silver.  It’s called arrogant pride.  It comes with making money and being right.  The Englishman, Edmund Burke suggested, “There was never a point of pride that was not injurious to a man.”  I watch for that among the advice givers.  It’s one of the world’s great sell signals.

For now, I’m sticking with Ted Butler.  Eleven years ago he advised that silver was a fortune builder and so far he’s been right.  I could get out now and live happily ever after, but I’m going to risk my winnings for a greater gain.  If it works out, perhaps I can leave the world a tiny bit better.

In fact, I’m still buying silver.  I believe that Ted Butler is right when he claims that silver is still undervalued.  Furthermore, the market still doesn’t understand his main arguments.  As long as that’s the case Ted says that silver is still a buy.

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