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Ted Butler: Silver is about to split from gold

Section: Daily Dispatches

11:41a ET Monday, July 27, 2009

Dear Friend of GATA and Gold (and Silver):

Silver market analyst Ted Butler predicts in commentary posted today that silver and gold are about to go separate ways as silver frees itself first from the price suppression that has afflicted both precious metals.

This divorce is likely, Butler says, for two reasons. First, because central banks do not have a silver stockpile with which to backstop the metals-shorting bullion banks as central banks backstop the banks by dishoarding official gold reserves. And second, because the U.S. Commodity Futures Trading Commission may be getting serious about position limits in the precious metals.

Butler writes: "The current relative structure in the gold and silver futures markets, as defined by the commitment of traders report, suggests the divorce may be near. In gold, the commercials are shorting heavily again, showing no fear in selling into the recent price rally. So far the big shorts have not yet shown a similar willingness to short additional silver contracts. This holds the promise that they may not short on further price gains. Simply put, if the big silver shorts don't sell additional contracts, the silver price will fly and the divorce papers will be filed."

Butler's commentary is headlined "D-I-V-O-R-C-E" and you can find it at GoldSeek's companion site, SilverSeek, here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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