Ted Butler: Crushing the Silver Short Positions
Tom welcomes Ted Butler back to the show to discuss the recent activity in the silver markets. Ted discusses the massive short position held on the Comex by Commercial speculators. These speculators have 80,000 contracts short, equating to roughly 400 million ounces as of last Friday. No other commodity has such a concentrated short position. If this position did not exist, the price would almost certainly be between $50 and $75.
He discusses why short positions are challenging for people to understand. How can someone short sell something that they don’t own, and why there is nothing inherently wrong with shorting. However, the position should not be so closely held in so few hands as to constitute price manipulation. Silver is cheap because of this manipulation.
These commercial interests are desperate to keep the price suppressed. Should the price head much higher, these commercial traders would be in an awful position. He believes they are already out many billions of dollars in the gold and silver markets and can’t afford to let these metals move higher.
He describes some of the methods they use to suppress the price and why the suppression usually happens at night. They are often buyers on the way down once they get the price headed lower.
Lastly, Ted explains how the silver short will eventually be broken and why it will require shortages of large bars that impact industry. He asks an important question, “Where did the 100 million ounces of silver come from in the last week, and why did they get rid of it for such a low price?”
Talking Points From This Episode
- Comex Silver Short
- Concentration & Manipulation
- Silvers Unique Characteristics
- Breaking the Manipulation
Time Stamp References:
0:00 – Introduction
0:40 – The Silver Short
6:10 – Concentration Explained
10:28 – Short Squeeze and Price
16:06 – Smashing the Price
19:10 – JP Morgan
21:24 – Breaking the Paper Price
31:36 – Playing this Market
39:22 – JP Morgan’s Position
43:23 – Leasing Metal Impact
46:45 – Wrap Up
Ted Butler began trading commodities with Merrill Lynch in 1972. He also worked at Drexel Burnham Lambert in the 1980s. Since 1996, he has been an independent analyst, primarily focusing on silver. He offers a subscription service with once or twice weekly commentaries, including a detailed analysis of the Commitment of Traders Report, regulatory developments, supply/demand considerations, and topics of interest to investors in precious metals, emphasizing silver.