The following interview took place between Jim Cook, President of Investment Rarities, and silver analyst, Theodore Butler:
Cook: You seem to be more bullish than ever. Why?
Butler: All of the things I look at in silver seem to be aligned for a sharp move up.
Cook: What things?
Butler: The market structure on the COMEX. The big commercial traders, led by JPMorgan, have managed to get all the technical hedge funds to plow into the short side of COMEX silver.
Cook: How does that help a move up?
Butler: The technical funds must buy back their thousands of short silver contracts since they can’t possibly deliver real silver.
Cook: How many contracts do you estimate the technical funds must buy?
Butler: A minimum of 50,000 contracts, which is the equivalent of 250 million ounces.
Cook: You think this will drive silver prices higher?
Butler: Yes, the quantity of buying virtually guarantees higher prices.
Cook: Guarantee? That’s a pretty strong word.
Butler: We only went down in silver because the technical funds sold so many contracts short and now that they appear to be finished short selling, they will soon begin to buy. This pattern is as regular as the tides. A slight increase in the price will cause the technical funds to buy.
Cook: Why does a price increase cause them to buy?
Butler: The tech funds use computer programs exclusively that cause them to buy when key moving averages are penetrated. That’s between $19 and $20 and it’s dropping daily.
Cook: How high could silver go once they start buying?
Butler: It depends on what JPMorgan and the large commercials do.
Cook: Why is that?
Butler: When the technical funds start buying, someone has to sell to them. If the commercials won’t sell, the price will spike much higher.
Cook: Why wouldn’t they sell to them? They have in the past.
Butler: Yes, they have, but if you look into the future, this game can’t continue because the result to this point has been to drop the price of silver so low that it is unsustainable. And more observers becoming hip to the scam also points to it coming to an end.
Cook: Don’t the other participants in the futures markets matter?
Butler: Not really, because most of the trades are between the technical funds and the commercials, mostly big banks.
Cook: What will break this monopoly and set the silver price free?
Butler: The passage of time. How much time, I can’t tell you, but it could be fairly soon.
Cook: We have a lot of clients waiting patiently for $200 silver. Is it still in the cards?
Butler: I still think so, in a blow-off. But it is important to monitor circumstances as time evolves and remember we must first move over $30, $40 and $50 before we get to $100 or $200.