In Jim Cook's Archive


By James R. Cook

The constant barrage of bullish silver information you get from us is predicated on two strong opinions. First is Ted Butler’s belief that the silver price will eventually explode. We are relying on this opinion because we know that Mr. Butler has intimately studied silver on a daily basis for almost twenty years. We believe he understands the nuances of the silver market better than anyone ever has. Furthermore, we’ve never heard any intelligent disagreement with him. His views have become part of today’s silver lore, and what he writes about becomes widely accepted knowledge.

When silver drops 80¢ in three days, as it did recently, with absolutely no news of any kind, he points to this as proof of manipulation. Commodity law exists to prevent paper speculators from setting the price. However, this recent price movement had nothing to do with silver users and producers. It was solely paper trading in the futures market. He claims you can set your watch by the repetitive up and down price action in silver. To Ted Butler, the manipulation is painfully obvious.

He insists that this price pattern will eventually be broken and, when that happens, the price will soar into the stratosphere. Those who hold physical silver will be in the driver’s seat and will profit handsomely. The fact that he is so adamant about the inevitability of a price rise give us comfort in passing on his views.

A second strong opinion is my own view that the Austrian school of economic thinkers are going to be right. We are committing economic sins for which the ultimate price is too painful to comprehend. When our Fed chairman, who was a hard money advocate, accepted his position, he made a deal with the devil. The Fed would have to expand money and credit endlessly with no regard to the ultimate consequences of currency debasement.

This loose monetary policy has enabled the government to spend recklessly and run mind-boggling deficits. It has allowed consumers to borrow and spend far beyond their means, and to create a huge trade deficit that puts the dollar’s future in the hands of foreigners. It has fostered leverage and speculation in financial markets that make the Roaring Twenties look like a neighborhood crap game. Easy money has led to an explosion in real estate values and a new class of citizens who use their home equity as if it were a charge card. Funny money has decimated national savings, curbed investment in production facilities and destroyed jobs.

Just a few years ago someone paid one-million dollars for an antique automobile. Last week at Pebble Beach a Dusenberg went for $4 ½ Million. Someone just paid $300,000 for Roger Maris’ baseball uniform, and a Hank Aaron bubble gum card sold for $90,000. This kind of asset inflation reflects a diseased currency. There’s too much money and, despite this glut, the economy’s performance remains mediocre. How many trillions more will be created to keep us from falling into a depression?

Perhaps the monetary authorities can keep things pumped up and maintain our false prosperity. Yet, these financial tricks build an edifice that rests on a fragile foundation. We can experience an economic 9/11 at any time. Realize that possibility. The future can jolt us. And that’s why you need to have ten to twenty percent in silver and gold. If Ted Butler’s premise is correct, you will make a lot of money with silver. If mine is correct, you will thank your lucky stars that you own it.

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