In Ted Butler's Archive


Cook: Lots to talk about with silver these days. What’s making you so certain of the price rise ahead in silver?
Butler: The market structure on the COMEX has improved dramatically. Then we have the supply-demand fundamentals along with surging investment demand. The most dominant silver price manipulator, JP Morgan, has stopped shorting silver and the government regulators may be looking at the silver manipulation.

Cook: When you say silver manipulation, what exactly do you mean?
Butler: It’s simple. Four large trading companies (banks) have acted in unison to sell silver short. This concentrated selling is always followed by buying when silver prices drop. It’s been hugely profitable for them, but at the same time it’s illegal.

Cook: You say the government is looking at it. What happens if the government puts an end to it?
Butler: Then the game is over for the big shorts and silver prices are free.

Cook: Without getting too complicated what do you mean when you say the market structure on the COMEX has improved?
Butler: On the recent $2 drop in silver the big shorts bought back as much of their short position as they could. We are now at the point where they usually add shorts on a rally. If they don’t add new shorts, silver explodes in price.

Cook: Is silver still cheap from all of this?
Butler: If there is one thing that just about everyone agrees on is that silver is cheap. The only thing missing is an explanation for why silver is so cheap and manipulation is the only plausible answer.

Cook: Okay. What are the supply and demand fundamentals you mention?
Butler: More demand than supply in every aspect of silver – retail, wholesale, industrial and investment. Look at your own business, your biggest concern is finding product to sell. How many times has that occurred in the fifty years you’ve been in business?

Cook: I see that the Silver Institute and others are forecasting a supply deficit this year and for the next ten years. What do you say to that?
Butler: Nothing could be more bullish for price than a supply deficit. However, the price hasn’t reacted to this fact. The big four shorts have been choking off the price rise.

Cook: That’s what you’ve been railing against for years, right?
Butler: Exactly. I know it gets old hearing this over and over but that doesn’t change the fact that it’s true.

Cook: How do the people who don’t believe the manipulation story explain how cheap silver is in the face of a shortage and a deficit?
Butler: They don’t. I’ve never heard a logical anti-manipulation explanation.

Cook: How high would silver be if these short sellers never existed?
Butler: A lot higher than currently, but the concentrated short position has existed for 40 years. The real question is what would the price be when the size of the concentrated short position in silver gets in line with the other commodities?

Cook: Ok, what’s the price then?
Butler: Well, here I start sounding like a madman. In a blow-off, we could go 10, 20 or 30 times higher. We may not stay at those levels, but they could be hit.

Cook: High prices will cure a deficit, won’t they?
Butler: It always has since prices have existed.

Cook: What happens if the industrial users can’t get all the silver they need?
Butler: The same thing that always happens when a shortage occurs, the users rush to buy and protect themselves causing prices to soar further.

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