Here’s a recent interview I did with Jim Cook, President of Investment Rarities, Inc., for whom I’ve consulted for more than 17 years (where did the time go?). It’s gotten to the point where about the only interviews I do are with Cook, but that’s not due to our long relationship. Rather, it’s because he comes prepared and wastes no words, making my role easy. With Cook, it’s always about getting to the heart of the matter, with the least amount of fluff as required.
Cook: Are you disappointed with the recent price action in silver?
Butler: Of course, I thought we might finally be breaking out.
Cook: What happened?
Butler: It’s the same old story. As I outlined previously, we were setup for a strong rally at the recent lows, but whether the rally was of the now-typical $2 to $3 variety or the big one was based upon whether JPMorgan added aggressively to COMEX silver short positions. JPMorgan, once again, stopped the silver rally cold by adding massive amounts of short contracts, just as they have on every silver rally over the past ten years.
Cook: How many contracts did they add?
Butler: Over the course of eight weeks JPMorgan added 23,000 new short contracts, the equivalent of 115 million ounces (on top of the 75 million ounces they were already short).
Cook: Why are they doing this?
Butler: To make both short term and long term profits.
Cook: How do they do that?
Butler: JPMorgan buys back the added short positions at lower prices. They have always made short term profits, with never a loss – a track record impossible in a free market. Secondly, since they continue to buy physical silver hand over fist at their self-created lower prices, JPM will profit immensely on their massive physical position whenever they take their foot off the neck of the price.
Cook: How much actual silver do you think they hold?
Butler: At least 650 million ounces.
Cook: How much longer do you think JPMorgan will be suppressing the price of silver so that they can accumulate more on the cheap?
Butler: That’s the billion dollar question to which I have no crystal ball. Truth be told, I thought they would have let it go when they held half as much silver as they do now. Back then they held three times as much as was held by the Hunt Brothers or Warren Buffett. Now JPM holds up to six times as much.
Cook: Can they do this forever?
Butler: Why would they? There’s no payoff for accumulating forever. The only plausible explanation for anyone massively acquiring any asset is the expectation of higher prices. JPMorgan is accumulating silver for one reason and one reason only – to make as large a profit as possible.
Cook: Is it possible the Government has given JPMorgan a mandate to hold down the price of gold and silver?
Butler: I know this is a popular opinion that seems to make sense, but there’s little direct proof of that. Besides, there’s a much better explanation.
Cook: What is that?
Butler: JPMorgan and other big banks are having a field day taking money away from the managed money traders (the longs) in full view and making billions of dollars in the process. I think that’s the prime motive for the price manipulation, rather than some broad government conspiracy. The motive is big and easy money.
Cook: Could the regulators put an end to this manipulation which you call a serious crime in progress?
Butler: Sure, they could, but I doubt they will. They are probably embarrassed for not having intervened to this point. How does the CFTC come out now and crack down on JPMorgan after letting them slide for nearly ten years?
Cook: What’s the downside of the price of silver at today’s levels?
Butler: A dollar or so, maybe more if JPMorgan and the commercials so decide. They need to get the technical funds to sell so that they can buy back their short positions. The only way JPMorgan and the commercials can do that is by rigging a series of new price lows that induces the technical funds to sell. I call it slicing the salami. That process seems to be underway and once it is complete, there will be little or no risk of lower prices.
Cook: What’s the upside for silver?
Butler: Almost unlimited. That’s what makes silver the best investment opportunity around. The risk in the short term is limited and when this current rig job on the COMEX is complete, there will be virtually no risk remaining – only massive profit potential.
Cook: A lot of people have been holding silver patiently for a long time. What do you say to them to ease their frustration?
Butler: Understanding the facts for why silver prices remain so low and why they will explode, are the only real solution to any frustration for why silver prices haven’t moved higher. They are the reason to expect much higher prices to come. It would be far more frustrating if we didn’t know about the COMEX and JPMorgan.
Cook: Are you backing off your prediction that people can make ten times their money with silver?
Butler: Heck no. In fact it’s a lot more likely, mathematically, for silver to go up ten times from the current price than it will be at higher prices. And considering how little actual silver exists in the world and how much of that is now owned by JPMorgan, the odds for a ten-bagger are better than ever.
Ted Butler
September 28, 2017
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