In Jim Cook's Archive


A number of factors have coalesced into a powerfully bullish case for silver. The current price may be as cheap as silver has ever been. It was certainly more valuable in Roman times when it was used for coinage, jewelry and utensils. The Romans employed 40,000 slaves to mine silver from Spain and this silver contributed greatly to the wealth of Rome. Silver had worldwide usage as money until the twentieth century. Today it could not be money because enough silver no longer exists. That’s because silver became an important industrial metal and the aboveground supply was used up. In 1940, the U.S. government owned 5 billion ounces of silver. That hoard is gone forever. Only tiny amounts of silver are used in most applications and that can’t be recovered. Silver’s scarcity, its low supply, its growing industrial usage and its reduced production from mining are converging bullish factors.

Silver (and gold) are considered to be the best protection against inflation and economic crashes. We are seeing high levels of fiat money creation in most major nations. It’s a worrisome time where interest rates are manipulated downward by the monetary authorities and new money is created in truly staggering amounts. The stock markets floats along at all-time highs and the bond markets walk a tightrope in a financial high-wire act. The potential for reversals in these markets provides another bullish factor for silver. Worldwide, currency creation and inflating in countries like China cause an increase in demand for silver as protection against currency debasement. This is another potentially huge bullish factor for silver. Also, the affinity for silver in India and much of Asia adds to the possibility of runaway demand.

Another factor is the chorus of predictions for higher prices by silver analysts, newsletter editors and financial writers. Here’s a typical quote, “I believe the gains in the coming years will be life-changing.” Anything that increases the investment demand for silver will likely create the beginning of a shortage. Once the price starts rising, the supply constraints will become noticeable and a buying panic is entirely possible.

Finally the changes that appear to be happening in the futures market may prove to alter the equation like nothing else. If JPMorgan steps away from the short side of silver as they appear to be doing, it’s game over for the other short sellers. The big bank owns the greatest hoard of silver ever accumulated. That may be the most bullish factor of all. They didn’t buy it unless they expect to profit. The potential for a short squeeze on top of everything else is the reason silver analyst Theodore Butler claims that when silver goes it will be like an atomic bomb on a hydrogen bomb on a neutron bomb.

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