silver - ted's latest

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    Economic essay follows.

    SPECIAL UP TO THE MINUTE JANUARY 26 INTERVIEW

    WITH SILVER EXPERT, TED BUTLER.


    (Investment Rarities does not necessarily endorse the views found in this interview, which may or may not prove to be correct.)


    Q What do you think about the price rise?

    A It’s very interesting because this price rise has been concurrent with my raising of some issues about certain large financial companies in early December. The price rise has coincided with my articles about them.

    Q You don’t think this is coincidental?

    A Not when silver is 70¢ higher since then, while gold is unchanged.

    Q Are gold and silver divorcing?

    A I think that’s the case.

    Q You’ve said it has to happen sooner or later, right?

    A It’s inevitable because we’re running out of above-ground silver and we’re not running out of gold.

    Q Gold isn’t going up?

    A Gold can go up, it’s just at some point silver has to greatly outdistance gold.

    Q Most people think they’re tied together and will only rise when the dollar falls. I take it you don’t agree?

    A I think they’re wrong. I don’t see the dollar having that much influence on silver.

    Q Silver is up 60% or so, but it hasn’t been the kind of price explosion you envision. Why not?

    A We haven’t really altered the paper short position on the COMEX. Silver will only explode when the paper shorting game ends.

    Q How will that come about?

    A It appears it has already started, and the large commercial dealers seem to be losing their appetite for the short side.

    Q What do you mean?

    A During the price rally last fall we didn’t see the usual super aggressive, concentrated short selling by the big dealers.

    Q Explain that a bit more?

    A The big shorts didn’t sell as much on price rallies as they did in the past.

    Q Why would that be?

    A I think they’re starting to sense just how dangerous a short position in silver is going to be.

    Q So, what happens if they cover?

    A We explode.

    Q Would you care to put a number on that?

    A When the dealer’s rush to cover, it’s going to lead to shockingly higher prices.

    Q You’re avoiding getting specific?

    A A quick run to double digits.

    Q With more to come later?

    A With a lot more to come later when the users panic and attempt to build inventory, as they must.

    Q Where does China fit into the current equation from the demand side?

    A They’re the major focal point, as they are in many commodities. They’re going to consume massive amounts of silver.

    Q Does this have much to do with the current price rise?

    A Maybe indirectly. However, I don’t think supply and demand is influencing this market yet.

    Q Why?

    A Silver is still manipulated.

    Q But you seem to think they’re starting to lose their grip?

    A Yes, but that doesn’t mean that the dealers are not going to try and rig selloffs in order to get the tech funds to sell. So we still have to be ready to take advantage of that.

    Q Could the current slow and steady price rise continue?

    A I don’t know. What I do know is when the dealers go to cover their short position there will be no gradual price rise. It will be straight up.

    Q I assume that means you still think silver is a buy?

    A The buy of a lifetime.

    Q Of course, when it gets as expensive as you think it will eventually be, it’s too late to buy it?

    A Exactly. The higher the price, the less the profit potential and the more the risk. Don’t wait for price confirmation to time your purchase.

    Q So, now is still good?

    A Absolutely.

    Q Care to put any time frame on this coming price action?

    A Soon enough.

    Q As closely as you study the market, are you seeing signs that the things you predict are starting to unfold?

    A I’m seeing continuing signs of that. I also don’t see any signs whatsoever that would negate it.

    Q That’s an interesting point. Care to elaborate?

    A In any objective financial analysis you always want to consider where you’re wrong and what’s the opposite side of the equation. I’ve always looked for those arguments that would suggest silver is going lower in price. I’ve never found one, and that’s especially true now.

    Q What about this bearish argument that silver will come out of the woodwork at higher prices and mining production will increase.

    A That’s funny. The most bearish argument that anyone can make only kicks in at a higher price. Let’s worry about those issues when we get much higher prices.

    Q You’ve been proven right so far. Is that pretty gratifying?

    A I’m glad that nobody lost money as a result of what I’ve written. Not losing is important.

    Q Are you comfortable still advocating silver?

    A Absolutely. All the things I’ve pointed to as being extremely bullish are still on the table.

    Q Do you think we’ll eventually set a new high in the price of silver?

    A Count on it.

    Q Thanks for your latest update.
 
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