In Ted Butler's Archive


Cook: One of our clients asked if you are going to be right any time soon?

Butler: Yes! I’m making my strongest possible arguments for silver, and let’s not forget that I was right in 2002 when I predicted that silver would go up ten times.


Cook: Ok. What do you think the price will go to now?

Butler: I don’t want to put an exact number on it, but I expect silver to be much higher. It’s inevitable.


Cook: You’ve always claimed the silver price has been manipulated downward for years. Why would that change now?

Butler: The big banks, or commercials have dramatically reduced their short position. I think they are beginning to see that being short silver is getting dangerous. If they don’t go short again on the next rally, the silver price will explode.


Cook: Why do you claim the price rise will be so dramatic?

Butler: The main shorts are the managed money traders or hedge funds who have been driving the price down by selling short. When the price turns up, they will start to cover and perhaps panic. I call their short position rocket fuel for a price rise.


Cook: Where does the supply and demand for silver fit into the price?

Butler: It doesn’t. The price of silver is set on the COMEX through this paper trading and nowhere else. There’s no producer hedging to any extent. Supply and demand don’t matter for now.


Cook: This does not sound like a free market.

Butler: It isn’t. However, as I mentioned, if the big commercial traders stop their manipulative short selling, we will have a free market overnight.


Cook: What factors would cause them to stop shorting?

Butler: They certainly are aware of the tightness in the silver supply. Investors in India are buying again in a big way. Coins and bars are selling at big premiums over the spot price. The exchange traded funds apparently can’t get enough 1,000 ounce bars and have to go short. For the first time, the 1,000 ounce bars that trade on the COMEX have a premium. These are signs of a shortage while at the same time, silver is ridiculously cheap.


Cook: You mean compared to gold?

Butler: Yes. The current relative undervaluation of silver to gold is the price measurement most out of whack in the world. It’s hard to come up with the proper words to describe just how cheap silver is, not only compared to gold, but to any alternative asset or investment I can think of. Its actual physical supply and demand fundamentals are at the most bullish in all the decades I have studied the metal. Its physical availability has never been tighter and its unique dual use as a vital industrial commodity and basic investment asset has never been stronger. It should be the most expensive it’s ever been, but it’s the cheapest.

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