Jim Cook, Investment Rarities interviews Ted Butler
Q: For a number of years, you have been insisting that silver would experience dramatic price gains. Any change in your thinking these days?
A: Not only has there been no change in my thinking, the case for a silver price explosion has never been stronger.
Q: In what way?
A: Well for starters, there is now more buying power in the world and less silver than ever. Every asset class has risen to all-time highs, while silver has gotten cheaper. The slightest switch from more expensive assets to dirt cheap silver will light a rocket under the price of silver.
Q: What else?
A: Interest rates. While we’ve yet to see negative interest rates in the U.S., they are a fact of life in Europe. Getting nothing on a deposit should spur people to buy asserts that are cheap and capable of rising in price.
Q: What about the possibility of more quantitative easing?
A: Yes, I think concerns about monetary policies have caused some big investors and institutions to acquire gold or silver lately.
Q: Like a hedge fund?
A: I don’t know who. I call one of them a “whale” because I believe they just bought 100 million ounces of silver.
Q: What about the biggest silver hoarder of all, JPMorgan?
A: Yes, they have recently become aggressive again and are the leader in taking delivery from the COMEX. They have around 850 million ounces of physical silver which is the equivalent of all the silver mined worldwide in one year. Between the ETFs and JPMorgan, they own most of the silver in the world.
Q: Is JPM the whole story in silver?
A: Yes, they are in complete control.
Q: Any chance they might use all that physical silver to hold down the price?
A: JPM holds enough physical silver to stave off any physical shortage for years, but the compelling question is why would they? They are already billions of dollars ahead on their physical gold and silver holdings after being in the red until this year. And they stand to make many tens of billions more by holding it and not supplying physical silver to the market.
Q: I wish more people could see the opportunity that JPMorgan sees in holding silver for the long term.
A: This business about JPMorgan buying up more physical silver (and gold) than ever seen in history is not known to most people. JPMorgan has been buying massive amounts of physical silver for eight years now. As the kingpin of the silver and gold markets, JPMorgan is now positioned to make an absolute fortune on higher prices. Your readers should do the same thing that JPMorgan is doing. They would also have a chance to make a fortune.
Q: The recent price rise in silver has been pretty dramatic. Do you see anything that could keep it rising in such an overheated fashion?
A: The biggest short sellers in COMEX gold and silver are now underwater as much as $4 billion and more likely than ever before to buy back short positions. If they panic and rush to cover, then prices will truly explode.
Q: Care to put a number on it?
A: No, you know I don't put specific numbers out because that involves a degree of precision that borders on hubris. But if the big shorts truly start to panic, silver could move dollars per day
Q: Any signs of a silver shortage?
A: Sure, everywhere you look, starting with the silver ETFs which are suddenly not getting timely physical deliveries when due. It comes down to whether JPMorgan will let go of some of its physical stockpile.
Q: These seven big shorts that are out so much money will certainly be trying to drive the price down so they can escape the pain, won’t they?
A: Of course, but if they are successful in getting out of those big losses I don’t see them ever going short again.
Q: What happens then?
A: The price of silver will skyrocket. It’s inevitable that thirty years of manipulation on the COMEX will end with a bang.