In Jim Cook's Archive


The information Ted Butler turned up about Bank of America’s enormous short position is not only bullish, it’s also bizarre. Who would go short silver in the face of today’s low prices? Furthermore, is Bank of America not aware that the thin supply of aboveground silver is tightly held and that investors are gobbling up bars and coins as fast as the mints produce them? Unless I’m missing something, they could be out many billions on their short sales. In fact, if silver were to explode in price and start to catch up to gold, they could be out a trillion dollars. How could a major U.S. bank with all its important financial responsibilities take on such an enormous risk?

You could make a case to short silver if it was $250 an ounce, but not now. With inflation surging to levels that have caught the monetary authorities by surprise, historical precedent suggests that investors are going to aggressively begin acquiring gold and silver. Silver is a recognized and known hedge against inflation. Furthermore, liberals and leftists are in charge of the government. Their socialistic leanings are causing alarm over the damage they will do to America. The immigration mess and the soaring levels of in-your-face crimes are two examples of politically motivated disturbances that cause people to feel insecure enough to add to their store of gold and silver.

The final nail in Bank of America’s short-selling coffin is that so many are becoming aware of this potential debacle. From the biggest hedge funds and asset managers, down to the guy who buys 10-ounce bars, they see that trying to come up with 800 million ounces of silver could be impossible. So how does this predicament get solved? Right now, nobody knows, but one thing’s for certain, the price will reflect the incredibly bullish aspects of trying to cover. We were enormously bullish on silver before this Bank of America news, which is icing on the cake. In this case, the icing is thicker than the cake.


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