Ted Butler: Squeezing Out the Silver Shorts
Tom welcomes a new guest to the show Ted Butler to discuss everything silver market-related. Ted has been following these markets for thirty years and closely watched the Comex during that time.
In April of 2011, when silver hit $50, there was an increase in physical movement through the Comex system. This increase also occurred when JP Morgan started storing silver. Over the past nine years, some 2.5 billion ounces have moved through the Comex system.
The question is, why is there such high flows only in silver and not other metals. He believes this is due to silvers uses as an industrial commodity, with this demand consuming most of the newly mined supply. When we get additional investment demand, we will likely blow the roof off the price as silver is the only commodity with this dual demand profile.
Price controls on silver have kept it suppressed, but all that’s required to avoid a shortage is to allow the price to rise through standard supply and demand. Today, it’s hard to find a genuine bear in the silver market because it’s so cheap relative to everything.
Ted believes that a significant reason for Bear Stearn’s collapse was their silver short position in 2007.
JP Morgan no longer holds a short position having mostly exited the paper silver markets since they acquired a massive stockpile of metals. They are currently neutral on the market. This is a good sign that the game is changing, and the other banks that are short today may be unable to exit without considerable losses.
Time Stamp References:
0:00 – Introduction
0:38 – Watching the Comex
1:50 – Physical silver movement thru Comex.
7:00 – Will the Comex have delivery problems.
14:40 – Short positions and who benefits.
22:20 – JP Morgan, profits and wanting to go long.
25:00 – Perfect cover for not shorting.
27:05 – JP Morgan 20 Billion ahead.
32:20 – Did JP Morgan buy mint bullion.
Talking Points From This Episode
- Physical silver flows since 2011.
- Silver industrial demand picture.
- JP Morgan’s current silver position.
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.