Straight Talk: An Interview With Ted Butler

December 8, 2015

Ted Butler is globally recognized as a sterling pundit and erudite scholar in the silver industry.  His writings about precious metals (especially silver) are comprehensive, detailed…and occasionally prophetic in identifying aspects that help determine silver’s price. His website is at

Gold-Eagle is proud to interview one the world’s leading researchers on the global SILVER industry, Ted Butler.


Question:  Many ardent students of the precious metals know that futures market positioning has a material effect on the price of world traded commodities, particularly gold and silver.  However, the vast majority of investors still do not have an accurate idea of the extent of price influence Commercials have on forging the price of gold and silver.  Would you provide some clarity as to this…and in particular the significance of the government COT data?

Ted:  The reason so many commentators have come to rely on the COT market structure approach is because nothing else has mattered to the price of gold and silver. But that doesn’t mean it’s easy for the majority of investors to fully comprehend why this has been the key to understanding price movements. Even though I wish I could just snap my fingers and explain this approach in a couple of sentences, that’s really hard to do.

The simplest description is that two distinct groups of traders in COMEX futures contracts, numbering no more than 50 to 100 traders in each group, trade such enormous amounts of contracts between each other that this trading dictates and sets the price of gold and silver to the rest of the world. The two groups are the managed money technical funds and the commercials (who are essentially big banks engaged in speculative trading). It’s important to note that very few if any mining companies or real metal consumers trade much on the COMEX – this is all a strictly speculative trading affair (which makes it illegal in my mind).

Because the technical funds rely strictly on price signals, they all buy when prices are rising and they all sell when prices are falling. The commercials know this and because they are able to rig prices up or down through HFT computer algorithms, the commercials lead the technical funds into and out from positions at will and at cumulative profits in the many billions of dollars.

The COT report details these position changes and because this premise is so regular and reliable, more commentators and analysts have adopted the approach. In addition, once one understands the essence of the COT report, it’s easy to see why this COMEX positioning is manipulative to the price of gold, silver and other commodities.

Question:  Taking into account the fact that COT data is issued by the government, do you believe possible ”massaging” these numbers might lead to price manipulation?  And if so, to what extent?

Ted: You hear that from those who mostly can’t comprehend the report and knock it because they can’t understand it. But I’ve been studying the report for 30 years and aside from a rare delay in compiling and reporting the data, I consider the most reliable government report of all. That’s because it’s incredibly easy to compile because there are so few big traders and these traders are compelled to report their positions accurately under the threat of serious penalties. In addition, since there has to be a long for every short in futures trading, even if a trader misreported a position, it would be quickly uncovered in the final tally.

It’s not the accuracy of the data at issue, it’s just difficult to grasp the whole concept.

Question:  Some analysts have ascribed the horrific decline in the price of silver since early 2011 as being due to an over-supply of the white metal. In fact silver has fallen about 65% from its 2011 peak at $48.  Do you feel this dramatic price decline is due to an uber-glut of silver weighing down the market?  And if over-supply is not the reason for the price decline, what is?

Ted: What glut? All the data indicate visible world silver inventories are flat to lower over the past 5 years, not higher. The drastic price decline over the past 5 years is due to COMEX positioning with the prime underlying motive of the biggest silver crook of all, JPMorgan, being to acquire more than 400 million ounces of real silver at bargain basement and manipulated low prices. At least, that’s my take.

Question:  For several years you have talked about “…excessive managed money technical fund bulk buying and selling of futures contracts.”  WHO and WHAT does this mean in layman’s language? Please be specific for the sake of clarity.

Ted:  Over the past 5 or 6 weeks, these managed money technical funds have sold and sold short more than 160,000 net contracts of COMEX gold (16 million oz) and more than 40,000 net contracts of COMEX silver (200 million oz). The commercials bought every single contract that the managed money traders sold. Gold prices dropped more than $130 and silver dropped more than $2 as a result of the technical fund selling. Basically the commercials tricked the technical funds into selling.

Now that the managed money technical funds have sold all the contrcats they can sell, we are set to go up in price and that rally may have started Friday.

Question:  What is the CFTC?  And is it not their sworn objective to regulate the Futures Market to insure equitable trading for everyone (Fund Managers and John Q Public)?   Specifically, what can the CFTC do to implement a level playing ground for all concerned?

Ted:  The CFTC is the US Commodity Futures Trading Commission and while it does have jurisdiction and the main mission of preventing the manipulation I just described, it is useless because it is in the big banks back pocket. This is no big deal at this point because there’s not much the agency can do to stop the coming silver price explosion.

Question:  We have noticed that recently there have been material changes in the Open Interest of gold and silver.  How would you describe these changes…and more importantly, what effects will the current Open Interest have on short-term prices of gold and silver?

Ted:  Open interest is precisely what the COT report dissects. The report was bearish to price around the end of October, but as a result of massive managed money technical fund selling is very bullish now. Look at any COT analysis on your site for confirmation of this.

Question:   Based upon your understanding of these conditions and their trends, what is your price forecast for gold and silver for 2016?  And for the next 5 years to 2020?

Ted:  It depends on what the COMEX commercials, particularly JPMorgan, do. Specifically, if the big COMEX commercials (of which JPMorgan is the biggest) don’t add aggressively to their short positions on the next silver rally, we could jump quickly to $30 or $50 or more. It’s not a question of anything else.

I should add that someday and maybe quite soon, the big COMEX commercials won’t add to short positions on a silver rally for a variety of reasons. Whenever that occurs, we go boom in the price.

Question:  Assuming the silver market will soon correct the current bear market conditions, do you think an investor will profit more in silver bullion or in established silver mining shares during the next 12 months?

Ted: I could see mining companies outpacing the price of silver when the real silver rally commences, but metal is much surer and less prone to things that could go wrong. After all, metal can’t go bankrupt. Plus I have this vision that someday silver will climb so high in price that the market will disbelieve the high price can be sustained and the price of mining company shares may discount that disbelief and not fully reflect the high price of metal. Until then, however, I wouldn’t be surprised to see mining shares outperform metals although I am not offering that as investment advice.


Gold-Eagle’s staff and its global readership are very grateful to Ted Butler for taking the time to share his insightful and timey wisdom with us.  Visit his website at .

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