Interview with Ted Butler – Silver Could Explode
There’s no question that, at present, silver trades like a commodity. However, there is some question about how long this will continue if the dollar weakens and inflation wins out over deflation. Silver has certainly functioned as money for the majority of human history, and has recently (in the past 40 years) lost that role. It does not seem like a leap of faith to assume that silver might regain its monetary status in the current economic climate.
I do believe that silver prices may fall in the short-term if deflation persists. But for those who currently own silver, that needn’t be a concern unless they are planning to sell it during that time frame. I don’t know why anyone would do such a thing, unless they absolutely need the cash and there’s no other way to get it.
For those that do not currently own silver, waiting for the price to bottom out during deflation before buying any certainly seems like a good idea in practice. But what if there’s no physical silver available to buy when that time comes? Already supply of physical silver is extremely tight. Why should that improve at all if the price continues to drop? People who own physical silver now would be nuts to sell with the falling price. Mines are not going to be able to keep producing silver at a profit if the price falls to $7/oz, from what I’ve read. The above ground supply of silver is already very limited. So where would the extra supply come from?
That’s why I think now is not a bad time to acquire silver if you can. And certainly, if you already own it, it’s not a bad idea to hang onto it.
hewitt (Mon, 10/20/2008 – 13:04)
Great info on AG!!! … Thanks! Sounds like common sense, and as a very wise banker recently said something to the effect of, I DON’T INVEST IN ANYTHING I DON’T UNDERSTAND.
I already invested my life and love into the darling of my life, whom requires more UNDERSTANDING than I would wish to bore you with…
So when it comes to other things, I prefer to keep it simple! Simple common sense and I’ll invest in you; but I wouldn’t invest a penny onto the two-faced sheister stock market, if you put a gun to my head, not even if you put a nuclear red button to my head!
In my opinion — comparing integrity and professionalism of institutions:
Stock Exchanges of the world: integrity, honour and professionalism: ZERO %
No honour, no integrity, no professionalism — it’s a massive, massive rip-off slavery exchange,by a bunch of lying, thieves in suits with fancy little pieces of paper on thievery from Yale and Harvard.
Las Vegas World Series of Poker or related tournaments: integrity, honour and professionalism: 99%
Las Vegas doesn’t promise more than what it is; and the bankers don’t run the show they impartially take a small percentage for their professionalism, and treat all tournament players equally. And furthermore, Las Vegas no DISASTER CAPITALISM INVOLVED… just PLAIN POKER. WHAT YOU SEE IS WHAT YOU GET.
Not sure why John50’s got his kittens in a knot about your opinions about silver….
Perhaps he just forgot how to tie a bowline, or drank too much port on starboard! 😉 Maybe he’s on a submarine and got a bit of the bends….. 😉
Hi guys/gals, sorry I haven’t posted updates, it’s not as if I have changed my opinion at all that this whole shortage of physical gold/silver is just hype, it’s that I have been waiting for my Scotiabank representative to get back to me. I was hoping I would have some good news for all you Americans and that I could give you the name of a person who can help you start accounts and buy your physical bullion but unfortunately, Scotiabank does not have any US branches. It is difficult to buy bullion with cash because of money laundering rules so visiting the main downtown branch of Scotiabank in Toronto is also out of the question. I would strongly suggest that if you have close friends or family that you can trust, for you to buy your physical gold/silver through them now. I have no problems in buying hundreds of thousands of dollars worth of bullion in physical form so just because it’s not available to Americans because of money laundering rules or access to accounts, doesn’t mean there’s a conspiracy and that the physical markets are so tight. I still believe this all to be hype and only wish I could have given everyone here a good way to buy… but it’s not because it’s not available. When you buy junk silver or coins, you still end up paying a hefty premium for what the commodity is really worth. When I buy my bullion from Scotiabank, they are calling me a nice tight 2 way market considering how volatile the commodity is.
Re: Bullion Accounts
Have you ever considered private, off-shore bullion accounts with a reputable private bullion bank?
There have been some posts about that but the concern was always how accessible that was to receive physical bullion if the need came to be.
Off shore physical bullion accounts are more reliable than an average bank when you are ready to sell. Physical, small denonimational PM are good to have as a money for money last resort, if that is the direction you are going. And it is more practicle to store your wealth in tangible, vaulted, gold bullion via a bullion account. Are you thinking that the banking sytem will collapse and the offshore bank will not be able to wire the money to you? The thing about private banks is that you develop a relationship with them, unlike the regular banking system. Gold has always been about long term relationships and trust. When the time comes, you’ll be able to get your gold/silver.
Yes John I was in silver in the 70s. At that time when I was young and inexperienced, I saw conditions were ripe for a rise in PM, but I took the fatal step of buying on margin. Silver went from $5 to $50 and I lost $15,000. That’s why to this day, I buy on long term fundamentals. I read charts, but in context to the fundamentals. Silver was at $5 since about 1980 while consumer prices must have tripled by that time. In 2001 when stocks nosedived, silver and gold started showing signs of life. At $7, I was sure it had come back to life. Downside risk is so low, this is a no-brainer.
My knowldege of economics comes from studying Austrian Theory (mises.org), from being a news junkie, love of history, and a student of crowd psychology. I’m reading the Jesse Livermore book now and it appears my experiences parallel his in many ways. I work a full time job and I don’t have the time and experience to do depth analyses like Chris and others do. In this day of the internet, there is a lot of good information out there, well written so people like me can understand what these numbers all mean.
Can you share your silver charts showing where price is going? Is silver going up? When, and to how high?
The short answer is that prices are going heights we can’t imagine today. I can’t give any precise timeline, because the extremes government authorities are going to to prevent the market from correcting itself is beyong anything I can imagine. Every time I think they came to the end of the line, they come up with something else. I bought silver on the grounds that the dollar is going to ground zero like every other fiat currency has in the past. Events of the past few months have confirmed my convictions, but the collapse is looking worse as the correction keeps being postoned.
I was talking to my broker today. He’s out of gold and has a few bags of junk silver on hand. Even numistic coins are sold out. People are scared, but they don’t know where to go for safety and they’ve been conditioned to be afraid of gold and silver. This is a worldwide problem with tons of money looking for a safe haven and so little gold and silver to satisfy worldwide demand. It’s like being on the Titanic.
I read Ted Butler regularly, but my strategy wouldn’t be any different if there were no Ted Butler. The Silver Institute has some good information. http://www.silverinstitute.org/index.php
I agree with buying silver, I have bought bullion for over 30 years, and have rarely sold any, except in 1979 and March 15 this year.
What I disagree with is amateurs who hype people into panic buying. The very title is typical boiler-room fear mongering – "Silver Could Explode" = the train is leaving without you = fear of loss – speculation mistakes of buying for the wrong reason. Six months ago these ‘cheerleaders’ were screaming that gold is going to $3000/oz and silver back up to $50 in headlines and bullion dealer newsletters everwhere. At the time, gold was over $1000, and silver was over $2.
IN 2008 – SILVER HAS GONE DOWN 50% FROM OVER $20 TO UNDER $10 TODAY – IN SIX MONTHS.
The point is not a question of buying bullion or not buying, it is buying at the right price (taking into account supply issues – the supply issues do not concern me, but I know bullion dealers in America are short.) Purchase silver and gold now if you are afraid you cannot locate bullion. Personally, I will be patient and buy much more at a lower cost. I will continue to short COMEX silver futures for another couple weeks or longer, where I have banked more than double the account in 6 months, then will enter at below half price, to quadruple the bullion holdings. If you are happy to buy in the teens and hold to see it go to half price, waiting for a rise years down the road, go for it.
Livermore warned traders should not try to pick bottoms, which trumps the bravado of buying as a contrarian. It is said the market can be irrational longer than you can remain solvent. In other words – avoid the "catch a falling knife" – as a classic trader mistake. Wait until the bottom is in, confirmed, and the market proves it has forces to move price action higher. If you want to act like a prudent investor.
I THINK I understand what you’re saying, but can you just confirm, are you saying that you DO think there’s a conspiracy and the physical markets ARE tight,or that you DON’T think there’s a conspiracy and the markets AREN’T tight?
Once again, the market sold off about $10 today just after 2 p.m. London time, just in time for the US opening. Hmmm.
If you are happy to buy in the teens and hold to see it go to half price, waiting for a rise years down the road, go for it.
You seem very certain about what will happen with silver over the next several years. I am not saying that what you suggest isn’t possible (i.e. price of silver dropping, and then having to wait for "several years" for it to go back up), but I don’t think that’s set in stone either.
Xflies – I never said anything about a conspiracy. Only that supply was tight in the US and in Europe. That’s a fact. I don’t know about Canada and don’t really care because I don’t live there.