Pearl Harbor, 2001
Ted Butler

(This article was commissioned by Investment Rarities and represents the exclusive view of Ted Butler.)

Sixty-three years ago, the United States embarked on a mission of war, to save the world. It was the most remarkable war effort the world has ever seen. In a few years of war we converted an armed force from under 200,000 to over 10 million. The production of war materials and logistics was equally breathtaking. There is no doubt in my mind that this war was won because of America's Greatest Generation. The whole world, to this day, owes a debt of gratitude to America, and that generation, for literally saving the world.

My father (the Greatest Generation's Greatest Dad) went off to war, along with his brothers as well as my mother's brothers, and my wife's father. Those that didn't go to the front toiled at home. It was America’s finest hour.

In this short article about silver I will attempt to convince you, once again, to buy real, physical silver. I’m trying, as always, to get you to think about silver in ways you haven’t thought about before. I resort to historical perspective because I think the proper way to invest in silver is on a long term, physical basis rather than on a short term, leveraged, paper basis.

Silver is a war material. America cannot fight a war without it. America cannot defend herself without it. There is no more necessary and versatile war commodity than silver. It is the best conductor of electricity. It is the best conductor of heat. It is the best reflector of light. While many recognize silver as a miracle metal, few recognize just how necessary it is to defending our nation.

Sixty years ago, when Japan attacked Pearl Harbor, the US had six billion ounces of silver. One to two billion ounces were consumed in the war effort that saved the world. Now, 60 years later, the US has acknowledged that it is basically out of silver. The US has not been out of silver since the time of Washington, Jefferson and Hamilton. I want to show you just how vulnerable the US has become because it has allowed itself to be tricked out of its silver.

The US has never fought a modern war, starting with World War II, with zero silver stockpiles. Not Korea. Not Vietnam. Not the Gulf War. Never. If there is another war it will be the first without a silver stockpile. Yet silver has never been more important to a war effort. We have never relied on electronics and high-tech weaponry for our national defense as we do today. Let's face it, if there is a next war it won't involve the conscription of millions of regular citizens to be foot soldiers. It will be fought in a modern manner. And none of our modern weapons of war could exist without silver. Not the missiles, not the aircraft, not the ships and submarines, not the torpedoes, not the batteries, not the lasers, not the surveillance photographs, not the solar-packs, not the night-vision equipment, nothing! Oh, some may say, we could substitute an inferior commodity. But would anyone seriously suggest we defend our nation other than the best way possible?

I’m not a military analyst, but my study of history tells me clearly that the best way to avoid war is to be prepared for war. A strong defense prevents war. An enemy is unlikely to attack if it does not sense vulnerability. We all know the US isn't about to start a war, or attack without provocation. Despite any criticism that America generates, that is not how the US operates. Its citizens would not tolerate it.

We have gone through wars and cycles since World War II. Our most recent cycle has witnessed the end of the Cold War and the self-destruction of our former enemy, the Soviet Union. We don't wake up every day worrying about mutual nuclear destruction. As a result, we have allowed our military to downsize. That was normal and good. But that doesn't mean enemies have disappeared forever.

What prompted me to write this piece, is the emergence recently of possible new enemies - the rogue terrorist states and also Red China. I'm not interested in debating whether my statement is politically correct or not. If you see it differently, let's leave it at that. Red China is bad news. I don't have anything against the Chinese people. I have everything against their totalitarian government. If anyone will have a conflict with the US, it will be Red China.

Fortunately, as a result of our downed Navy plane, our leaders appear to have awakened to this threat. This is where silver comes in. Read the newspapers, follow the debate. We are now likely to embark on a historic military buildup. This is a most important responsibility of the United States Government - national defense. It’s not social security, not medicare; not education and not energy. Without a strong national defense nothing else matters.

And this historic military buildup which you will see unfolding before you, if you look, will be a special buildup. It will be a hardware buildup. It will not involve a buildup of the infantry. It will involve the production of missiles, sophisticated aircraft, ships, and weapons of all types, including space weapons and lasers. Every single bit of hardware will require silver. More silver than was ever needed before. Yet the US, for the first time in its history, has no silver. They have recently transferred the last of the silver from its National Defense Stockpile to the Mint for coin production. Think about that for a moment. Why was silver in the National Defense Stockpile in the first place?

Here I have to mention the Silver Users Association. They are the prime culprit in why the U.S. has no silver left. They have lobbied to have the government dispose of their silver so they could use it. I took them to task in a recent article as a group that flaunts the anti-trust laws. Let me add another charge. I think their actions in procuring our country’s silver at a highly favorable price is grossly self-serving and unpatriotic.

There is nothing you or I can do about our government's missing silver. It's gone. The problem is not in where will we get the tens of millions of ounces for the mintage of Silver Eagles over the next few years. If the Mint stops producing silver coins the world won't end. The problem is where will the United States get the hundreds of millions of ounces of silver necessary for our national defense. Without an adequate national defense, the world could go up in smoke.

Defense contractors can no longer buy silver cheaply from the government stockpile. They will have to procure it on the open market at much higher prices. This expense will be billed to the government and the taxpayers. And, in case there’s a chronic shortage, it would have been nice for the government to hold on to a supply of this critical precious metal. Why should taxpayers be forced to pay sharply higher prices for silver in the future after receiving low prices as the government sold? Nor is it just about price. It’s a question of availability of a critical item in a shortage. Maybe they won’t be able to get it in a timely fashion. I intend to submit this article to the appropriate members of congress and the administration. This is an issue that concerned citizens should raise.

You don't need me to paint a clearer picture. I don't care about the stock market. I don't care about the dollar. I don't care about interest rates or inflation. I don't care whether precious metals back our currency. I don't care about stupid stories about silver coming from India or Red China. I don't care about the charts. I don't care if silver is 5 dollars, or 4 dollars. This country has none left. This country needs it for its survival like never before. Forget the investment opportunity of a lifetime for a moment. That's a bonus. Buyers and holders of real silver may bail out Uncle Sam down the road. Let's hope we never have to seriously deploy our arsenal. Good luck to you and good luck to America.