Jim Cook Interview with Ted Butler
August 4, 2010
Cook: I want to limit this interview to a discussion of why someone would switch gold into silver. You advocate that right?
Cook: What's the main reason?
Butler: Because those who switch will make a lot more money than those who don't switch.
Cook: Don't you think gold will go higher in price?
Butler: I think it will, but silver is poised to go much higher relative to gold.
Cook: Most people believe gold has done better than silver up until now. What do you say to that?
Butler: An objective analysis would suggest otherwise.
Cook: Give us the objective analysis.
Butler: If you bought gold at the extreme lows of $250 or silver at $4, your returns would be roughly equal.
Cook: People have an emotional attachment to their gold. It's hard to part with. What do you say to them?
Butler: That emotional attachment could cost people a lot of money.
Cook: What do you mean?
Butler: I believe that the emotional attachment is to the idea of gold, not to gold itself. People want an asset that is immune from the conventional financial system and government control. Gold has traditionally been that asset. I understand and accept that. However, due to changes in the world over the past 100 years, silver has become better than gold.
Cook: Better than gold?
Butler: Yes, better. I believe silver is the new gold.
Cook: What could make you say that?
Butler: The fact that we have used up so much silver over the past 50 years. Now silver is rarer than gold in world bullion inventories. Only a handful of investors realize that.
Cook: What is the status of gold and silver inventories?
Butler: World silver inventories are at their lowest point in 200 years while gold inventories are at their highest.
Cook: Do you know how much egg you will have on your face if gold goes up and silver doesn't?
Butler: I don't worry about that. Do I have egg on my face for informing the world that silver was manipulated, or rarer than gold, or that JPMorgan was the big silver short?
Cook: Frankly, I own some gold and I don't think I have it in me to make the switch.
Butler: In all due respect, your emotional attachment is showing. I don't deny that's a powerful force, just that investment analysis is different. I'm not suggesting people sell their gold and call it a day. I'm suggesting a conversion of gold into silver. This way, you keep the emotional attachment and greatly boost your investment returns.
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Cook: I think it's a good time to switch rare coins into silver. What do you say to that?
Butler: I think it's a good time to switch anything possible into silver, including rare coins.
Cook: If a person only owns gold and no silver what about shifting a percentage of it into silver?
Butler: It's important to get as much silver as you can.
Cook: Can you give us an illustration by using the prices we could see in the future?
Butler: Sure. Let's say silver goes up 300% to $50 an ounce. To equal that gold would have to go to $3,600. With silver at $100 an ounce, gold would need to be $7,200.
Cook: You think it's more likely that silver will reach those levels?
Butler: More likely? I can't see how silver won't reach those levels in almost every possible future scenario. On the other hand, it will have to be a very ugly world for gold to hit those numbers.
Cook: What about the gold to silver ratio?
Butler: For hundreds of years it was 16 to 1. Gold was priced 16 times higher than silver, now gold is 64 times higher.
Cook: How much gold and silver does our government hold?
Butler: They ran out of silver. The U.S. Mint has to buy millions of ounces of silver every year for its coin programs. U.S. gold inventories are in the billions. It means the government can't manipulate the silver price. They don't have any to sell.
Cook: You've called silver "the single greatest profit opportunity of our time." Are you sticking with that?
Butler: Absolutely. I believe they will be writing about the coming price events in silver for centuries. If you don't have silver but you own gold a switch makes a lot of sense to me.
Cook: What about selling half your gold to buy silver?
Butler: Fine. Whatever you have to do to get silver get it done. I believe the time is growing short before the things I have written about begin to unfold.