In Ted Butler's Archive


Why hasn’t any big buyer stepped into silver yet? After all, there are many thousands of individuals who could buy 100 million ounces. I’ve used 100 million ounces because that was the approximate amount purchased on the two prior occasions someone big bought silver (the Hunts in 1980 and Warren Buffett in 1997).

Silver is such a universally recognized element and historical item, that it is a rare person who doesn’t have an existing opinion about it. Such predispositions serve to block us to new ideas. This may be even truer with those who control great sums of money. The most glaring feature of silver (to me anyway) is that its price is manipulated. That idea causes doubt among large market participants. They don’t believe price manipulation could occur with so few being aware of it. Once the idea of manipulation is rejected by someone, it stays rejected.

Unfortunately, some of those who have come to embrace the fact that silver is manipulated feel compelled to add unnecessary embellishments. That makes the whole thing sound like a kooky conspiracy theory. It would be so much more convincing if they stuck to the bedrock facts of the COMEX manipulation and the concentrated short position.

There was no big buyer on the last run up to $50 in 2011. None will be required on the coming go-round. However, the presence of a big buyer or two would help the next silver surge. There is good reason to expect a big silver buyer to emerge soon. However, there really isn’t room for more than one or two big buyers. It would be impossible to purchase one billion ounces of silver bullion because that’s all that exists in the world and very little of that is available for sale at current prices.

Potential big buyers may wonder why silver is so cheap. It’s because eight or less crooked traders on the COMEX are short the equivalent of 325 million ounces. That’s more than 40% of annual world production and a third of all the silver bullion that exists. No other commodity has such an extremely concentrated short position and if this short position didn’t exist, the price of silver would be much higher. A big buyer can easily verify what I claim since the data are published weekly by the CFTC.
For any prospective large buyer, one lesson that should be learned from Buffett is the need to purchase and hold physical silver. The amount of physical silver is limited to what existing holders are willing to part with. Holding physical silver puts the law of financial physics on the buyer’s side.

I’d be remiss if I didn’t mention my theory that JPMorgan has amassed upwards of 300 million ounces of physical silver over the past four years. JPM is the most powerful and, in many ways, the most sophisticated trader in the world. This bank controls the silver market. How they accumulated as much silver as I claim they’ve acquired is a testimony to their skill, power and treachery. But not even JPMorgan was able to buy 100 million ounces of physical silver in a short time. It took them at least four years. If JPM did buy as much physical silver as I allege, that tightens the physical market even further and makes the price impact of new buying more potent. JPMorgan wouldn’t buy this much silver if it wasn’t looking to score big. They could easily rack up $30 billion or more.

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