In Ted Butler's Archive


All essays in this newsletter, including those by silver analyst Ted Butler, express the sole views of the authors. Investment Rarities does not necessarily endorse these opinions.

There are bulls and bears in every market. Since I envision sharply higher prices for silver, I’m on the bull side. However, there has not been a day in 30 years when I have not considered the bear case. Much of this bearish sentiment is based on charts and technical analysis. The charts tell you in exquisite detail where you have been; but are nowhere near as accurate in predicting the future.

Charting and technical analysis is predicated on the idea that markets are free. Silver has been manipulated in price. Since price solely determines chart analysis, it seems illogical to depend on a manipulated price.

Thirty years ago, when I first discovered silver was manipulated the price hovered between $4 and $5 for years on end. Even though the world was consuming more silver than was being produced and depleting world inventories at an alarming rate (which is the most bullish circumstance possible in any commodity), the majority of commentators spoke about silver surpluses for as far as the eye could see.

When people see low prices, they assume the fundamentals must be bearish. Those interested in silver should try to separate the fundamentals and the price. There has been no surge in silver production this year, nor any drop in fabrication demand. With silver prices below the cost of production for many miners, it’s not likely that production will surge.

For 30 years, the price of silver has stagnated, experiencing powerful bursts in price more extreme than in any other commodity. On five separate occasions, in 1987, 1997-98, 2006, 2007-08, and in 2011, the price of silver doubled in a matter of weeks or months. Silver is produced and consumed 24/7 on every single day of the year. Silver is one of the oldest metals in human history and is truly universal in recognition. With that background, why should it be normal for the price to stagnate for years, only to erupt and then collapse again in remarkably short periods of time? What legitimate free market forces could possibly explain the highly unique price pattern in silver unlike any other commodity? There is no legitimate explanation other than JPMorgan manipulating the market.

For the past six years, JPMorgan has been a short seller on every silver price rally of significance. This is why the silver manipulation has persisted. The manipulation will end when JPMorgan no longer adds to its COMEX silver short positions. Market manipulations are rare and illegal. History shows that all market manipulations, no matter how long they last, must come to a sudden end. Considering the legal and regulatory hot water that JPMorgan has found itself in recently, things could change in a hurry.

Silver is not an asset that can go bankrupt or become valueless, it is a vital industrial metal with intrinsic value and an alluring investment appeal. The price could suddenly erupt and double without notice. The current low price is the ideal entry point. JPMorgan’s manipulation is the silver investor’s greatest ally. If silver wasn’t manipulated, the price wouldn’t be in the bargain basement.

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