In Ted Butler's Archive


I have contended for years that silver has been manipulated and suppressed in price. According to the law of supply and demand, if what I say is true, a physical shortage must occur at some point. No other outcome is possible. The signs that we’ve finally arrived at that point have never been clearer. The current physical shortage in retail forms of silver has resulted in premiums higher than ever and has persisted for longer than any time in the past.

While the shortage of retail forms of silver is nothing to scoff at, a true shortage must include a shortage of 1,000 ounce bars. This is the form of silver most directly related to the price. It is the market for 1,000 ounce bars of silver that signifies we are close to hitting the wall. The total supply of silver in the world that exists in the form of 1,000 ounce bars amounts to 2 billion ounces. This quantity includes the silver in the COMEX warehouses, the world’s silver ETFs and silver in private ownership. As investment demand has grown, the amounts of silver held in the COMEX warehouses and in the world’s silver ETFs has grown to nearly 1.6 billion ounces, up ten-fold from 2006 and making up 80% of the 2 billion ounces of total silver thought to exist in the world in the form of 1,000 ounce bars.

At the start of 2020, there were 1.1 billion ounces of silver in all the silver ETFs and COMEX warehouse. Today there are 1.6 billion ounces. It is the tremendous growth over the past year in the publicly-visible holdings of silver in 1,000 ounce bar form that tells me we are very close to hitting the physical silver wall. The amount of silver held in the silver ETFs and in the COMEX warehouses can’t exceed the total amount of silver that exists in 1,000 ounce bar form. The absolute limit of silver in the ETFs and on the COMEX can go to is 100%.

When we hit the physical wall in silver, the influence of the 4 and 8 largest COMEX shorts will go by the wayside, as all the paper short-selling in the world won’t satisfy physical demand. The only reason the big shorts have been able to suppress silver prices for decades is because no true physical shortage occurred. But it will be a completely different world in a period of physical shortage. Industrial silver users need physical silver more than they need artificial low prices and any sudden denial of physical metal will not be tolerated.

Then there’s the matter of the CFTC and its pending response to my rather specific questions of March 5 about the concentrated short position in silver. I may be off in my timing as to when we hit that physical wall, but the evidence that we may be very close is all around us – from the ongoing retail physical shortage, to the role of leasing, to JPMorgan slipping out from its short position, and to the two biggest silver ETFs adding a paragraph to their prospectus that silver suddenly looked hard to come by. And it’s very difficult to imagine the growing grassroots silver movement going away anytime soon.

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