In Jim Cook's Archive


Silver analyst Theodore Butler wrote this week that silver was still widely undervalued compared to gold. He claimed that if the silver/gold ratio dropped by half, silver would still be undervalued. That would put the ratio at fifty to one and silver priced at $34 an ounce. In other words, silver would still be a bargain at $34. That opinion is based both on fundamentals and the ongoing price suppression of silver by the big short sellers whose grip appears to be weakening.  Importantly, JPMorgan, the biggest short in recent memory, has eliminated its short position altogether. Its huge physical holdings of gold and silver tower over the market and accentuate the bullish forces now in play for precious metals.

Mr. Butler also points out that silver investment demand continues to be strong. Exchange traded funds are experiencing a big surge in buying and coin dealers can’t keep up, with delays in receiving and shipping silver bars. On the COMEX, eight big shorts are out almost $8 billion on their losing positions. Should one of them break and start to cover, this would set off some kind of price fireworks and a possible buying panic.

Furthermore, the Justice Department and Commodity Futures Trading Commission are investigating the trading practices of JPMorgan, Scotiabank and HSBC in gold and silver.  So far, they seem to be concentrating on the illegal practice of spoofing (placing false orders and withdrawing them to manipulate prices). Ted Butler has frequently alerted the regulators to these manipulative practices and has shown how JPMorgan has suppressed the price of silver in the futures market while loading up on physical metal to the tune of a billion ounces.

On top of all this, we have the economic consequences of COVID-19 and the enormous money-creation that’s a response. This should inevitably send silver into orbit. A large contingent of boosters and cheerleaders are making bullish predictions in their publications and silver has become a hot topic. Further economic deterioration or money creation should set forces into motion that ultimately set silver free. That’s why Mr. Butler insists that silver at today’s cheap price is the investment opportunity of a lifetime.

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