In Ted Butler's Archive


Silver purchased in retail forms tends to be held for long periods of time, sometimes over a lifetime. To some extent that’s because of the rather few opportunities silver investors have had to cash in at high-enough prices. While silver has yet to visit price levels where most investor would consider selling it, that day is surely coming and I believe most silver investors agree. This is why silver investors have been remarkably tenacious in holding onto their silver.

Eighty percent of the world’s total silver bullion inventory of 2 billion ounces is tied up in the world’s silver ETFs or in the COMEX warehouses. That’s 1.6 billion ounces of 1,000 ounce bars. In the face of much steeper price declines than occurred in gold, the reduction in the holdings in the world’s silver ETFs has been negligible. While gold ETF holdings are at the same level they have been for years, silver ETF holdings are 600 million ounces more than they were in 2016.

I’m leaving out the frequently-recurring phenomenon in silver whereby large investors have converted several hundred million shares of SLV into non-disclosed physical silver ounces to avoid reporting requirements. The net effect of these conversions is to understate how closely-held is the world’s 2 billion ounce inventory of silver bullion.

Silver prices have fallen more than gold prices, yet silver is more tightly held than gold. I’m very bullish on the prospects for much higher gold prices based upon the COMEX market structure (including uncovering the presence of a new gold whale in COMEX futures), but it is downright shocking how much stronger are investor holdings of silver. Silver bullion is the tightest and strongest-held of all commodities and investment assets, but that’s just for openers. It gets a lot better for those expecting sharply higher silver prices. That silver is so tightly-held is bullish enough, but now comes the really bullish part.

All we need is some minor price gains to $30 or less to get silver going on its inevitable journey to the heavens. In fact, the basic story of the decades-old COMEX price manipulation is simply to prevent the slightly higher prices that would set off the stampede into silver. But that manipulation is now older than the hills and the big commercial crooks have positioned themselves to withstand the full fury of the coming silver price surge. The biggest silver crook of all, JPMorgan, with hundreds of millions of silver ounces, is set to make the most when the silver price goes boom.

Higher prices beget still higher prices. Try coming up with an alternative explanation to explain the upward trajectory in everything around us – stocks, bonds, commodities, real estate, cryptos – and then try to explain silver sitting out the boom. Those currently holding silver make up such a tiny percentage of the investment world – way, way less than a fraction of one percent of total world financial assets – that when the silver bull really gets rolling, there will be ten times as many new investors looking to buy than old investors looking to sell. So all that’s missing for the silver price juggernaut to get rolling is some much smaller price pop to get the train in motion.

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