In Ted Butler's Archive


Cook: Despite the recent drop in silver, you seem to be more bullish than ever. Why is that?
Butler: We have the tightest physical wholesale market conditions than ever before. The 40-year price suppression on the COMEX has resulted in a shortage of silver the likes of which the world has never experienced.

Cook: Could you explain why a low price leads to a shortage?
Butler: Under the law of supply and demand, the high price causes greater production, less demand and a surplus. A low price means less production, greater demand and a shortage.

Cook: How exactly is that playing out today?
Butler: Thanks to the COMEX price manipulation, too low a price for 40 years has created a monster of a silver shortage – now emerging.

Cook: What are the signs of a shortage in silver?
Butler: The clearest sign of all is the sharp decline in the holdings in the world’s silver ETFs and in the COMEX silver warehouses over the past two years. More than 300 million ounces have been taken out.

Cook: Is that because investors are selling?
Butler: There are no signs of investor liquidation. Remember, silver is both an investment asset and industrial commodity. Silver inventories, particularly in ETFs, should never go down when there is no evidence of investor selling. This means the reductions are caused by industrial demand. That’s the kind of demand that first leads to a physical shortage. After that, investor demand kicks in.

Cook: Could silver become hard to get?
Butler: It’s already hard to get; that’s what the sharp declines in recorded inventories are saying loud and clear. And as you know, retail forms of silver can become hard to get in a flash. In silver, the combination of low price and current retail availability will not last.

Cook: You’ve explained how a very effective price suppression by the big banks and funds on the COMEX has held down the price of silver. Will this looming shortage force them to change their ways?
Butler: Absolutely. In fact, a physical shortage is the one sure result to end the decades-old manipulation. I had hoped the regulators would have stepped in sooner, or that the growing widespread knowledge of the COMEX manipulation would do the trick, to no avail – but a physical silver shortage will end the manipulation – pure and simple

Cook: What would a free market look like?
Butler: Since no one living has ever experienced a free market in silver, it’s like asking what heaven looks like. At a minimum, it would involve different price action and price levels never seen before, the type of which will be rewarding to those holding silver beyond almost all expectations.

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