Ted Butler's take on the Buffet affair. Can it be, a Silver Super Bull thread and this is the first mention of Ted Butler?
"Any discussion of silver stockpiles would be incomplete without mentioning Warren Buffett's famous silver purchase of a few years ago. Since the silver was purchased by Mr. Buffett's publicly owned company, Bershire-Hathaway, certain details were revealed that might have not normally been disclosed. While Mr Buffett, uncomfortable with the publicity, imposed a vow of silence after announcing the purchase, he did say he would say when he sold it.
To this date, there has been no sale announced, so most assume he holds it. If so, it does represent a potential source of future supply at some price. Here are the facts. Bershire-Hathaway bought a total of 130 million ounces, but only received delivery of 90 million. The sellers couldn't come up with the last 40 million, and Buffett let them slide (For a fat lease fee, to be sure).
No one knows if he ever got delivery of the last 40 million ounces. Additionally, when Buffett purchased his silver in stages, starting in the summer of 1997, the 90 million ounces he did purchase were physically removed from the COMEX warehouses, and shipped to London. In February of this year, 30 million ounces of silver were shipped from London, back to the COMEX, in a single shipment. The silver was put in COMEX warehouses already in "registered" form.
Now here's my analysis and speculation. That silver couldn't come back to the COMEX in registered form, unless it left the COMEX originally in registered form. The logistics would have precluded that, as each 1000 ounce bar, in a 5 bar COMEX warehouse receipt must be recorded by serial number. Since the 30 million ounces came in over the course of no longer than one week, it would have been impossible to newly record and verify 30,000 individual bars. Impossible. I conclude that this was part of Buffett's original silver. Now, was it the last 30 million of the 90 million he did get originally, or the first 30 million ounces, with 60 still to go? Based upon the time lapse from when Buffett first bought his silver, until the February shipment back to the COMEX, and the time that has passed since this February shipment, I think it was his last 30 million ounces. I think the first 60 million was consumed in the silver deficit since 1998.
How is it possible that Buffett disposed of his silver without publicly disclosing this fact, as he promised, and as would seem to be required by SEC reporting regulations? Easy. Buffet "leased" his silver. That means it left his possession, but he still has a paper claim, which, for reporting purposes, says he still "owns" the silver. While that silver will never be returned to Berkshire-Hathaway, don't worry about Mr. Buffett or his shareholders. I'm sure he negotiated penalty fees, in the event of default, based upon a minimum price of $25/oz. for this silver, in addition to collecting lease payments all along."
From Silver Profits in the New Century by Theodore Butler, pps.28-29. |
