In Jim Cook's Archive


Twenty-three years ago this month, a friend told me about Theodore Butler who supposedly knew a lot about the silver market. I decided to call him and was quickly impressed with his knowledge of gold and silver. When Mr. Butler talked about the potential price gains ahead in silver, I began to see an opportunity for both my company and our clients. Mr. Butler was a former commodities broker with Merrill Lynch, and he had a completely different analysis of the market than what I’d been used to. My company looked at silver in terms of supply and demand. We saw prices impacted by the dollar, interest rates, inflation and deflation. Ted Butler argued those factors were mostly meaningless in determining the price of silver. He claimed the price was set by futures market trading on the COMEX. He named a number of big banks that dominated and manipulated this futures trading.

The thing that got my attention was his insistence that a few big banks were controlling prices through short sales. They had figured out a way to harvest big profits through market manipulation. The silver price was artificially depressed through these antics. Therein lay the opportunity for investors. Once the free-market price was reestablished, it would be at much higher levels. Ted Butler wrote a few articles for our newsletter explaining his theories. It was so convincing I structured a deal with him to be an independent consultant exclusively for Investment Rarities.

Silver was under $4.00 an ounce when he predicted it would rise ten times. In the years that followed, it did exactly that. Subsequently, he pointed out JPMorgan as the chief manipulator and short seller of silver. Recently he’s shown that banking giant JPMorgan has abandoned their short-sale manipulation and accumulated a vast hoard of physical silver at low prices they engineered. (Four of JPMorgan’s silver traders have been indicted for spoofing, putting in fake sell orders and then withdrawing them.) Thus, silver has lost one of the big factors that has depressed the price. The main thing that Mr. Butler has always stressed is that artificially holding down the price of silver caused an increased demand and a reduced supply. That long term distortion will be resolved by silver reaching its free-market price which Mr. Butler insists is much higher. He also suggested that the manipulation has made a silver shortage inevitable. This, he claims, will lead to prices so high they will be written about for a hundred years. Nobody knows more about silver than Mr. Butler. He is a pioneering thinker and probably the most plagiarized analyst in the history of the precious metals market. We are lucky to have him.

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