|From : James Cook Interview|
@ investment rarities inc.
Anyone remember silver guru Jerome Smith?
Jerome Smith was a pal of mine. In the early 1970's he wrote a book, "Silver
Profits in the Seventies." After I read it I couldn't get into the silver
business fast enough. For two years I lugged 55 pound bags of 90% silver
coins around in my trunk and delivered them to local customers I'd sold over
the phone. The bags were around $1300 when I started. With a $1,000 face
value they were the safest and best investment of the decade. Subsequently,
silver multiplied in price over 25 times. I ordered dozens of Smith's book
and gave them to my prospects. If they bothered to read it, they bought
Jerome's book had a powerful effect on the silver market. People began to buy
silver because of it. Even Bunker Hunt was said to have been heavily
influenced by "Silver Profits in the Seventies." Jerome Smith also wrote an
influential monthly newsletter. He predicted with uncanny accuracy the rise
in gold and silver. He followed that with a bullish report on platinum that
was another home run. For me at the time, he was a giant among men.
In 1979 he came to Minneapolis to visit us. All who knew of him treated him
like royalty. I took him downtown to visit a silver dealer and the sales girl
literally swooned when I introduced him. We stopped at a cigar store where he
purchased some tobacco. He asked the clerk if they accepted paper money. It
laid me away. I laughed for days at the great one's joke.
Jerome did not manage his fame well. He drank. He could be downright cranky
if questioned. Once at a monetary conference he took my head off for asking a
question. Who could forget his long, rambling monotone speeches at these
conferences. People would cheer him despite the fact he soon put them to
sleep. One day I smelled booze on his breath before he spoke. It was my first
clue about his drinking problem that grew worse and worse.
In the early eighties his writing lost its verve as did the luster on
precious metals. For Jerome, silver was now profitless. He soon had tax
trouble. Perhaps it was purposeful. He despised the government. Once he told
me they were the root of all evil. He claimed that everything wrong in the
world could be traced to government action. Apparently he was pursued by the
tax authorities. He retreated to Costa Rica where financial problems
continued to plague him. His drinking grew worse. A printing business he
owned failed. Soon thereafter he died.
By chance I came across his ex-wife a few years ago. Barbara was a secretary
for a mining company in Vancouver that I owned shares in. She told me of his
severe drinking problem. It was a sad end to a troubled personality. In a
sense, he threw away a decade of brilliant forecasting that should have been
a solid business foundation. His personal devils bested him and he retreated
into self-destructive drinking that shortened his life.
Jerome's basic premise was that silver demand exceeded supply. Industrial
demand was going to grow and higher prices wouldn't fix the shortage of
silver. That was because silver supply came primarily as a byproduct of
copper and gold mining. Higher prices for silver wouldn't cause copper miners
to produce more copper to get more silver. It all made sense until the price
of silver went up ten times. That unleashed a hoard of silver coins and scrap
in America and elsewhere. People in the U.S. lined up to sell their
silverware. This flood of metal confounded Jerome Smith predictions and
helped to derail the Hunts.
Fast forward thirty years and Jerome Smith's prophecies about a permanently
higher silver price are at last ready to fall into place. But even he would
be shocked at the level to which the price of silver may escalate soon.
Jerome wrote about a historic confluence of bullish factors. Today these
factors and others have come together once again to create an explosive
situation the likes of which you will never see again in this lifetime. The
new factors are both bizarre and incredibly bullish beyond anyone's ability
to fully comprehend. What it will lead to cannot be plotted or guessed at.
It's beyond prediction. It's just too fantastic.
Basically, all the bullish trends that Smith argued for are intact but even
more so. Superimposed on this super-bullish story are the actions of mining
companies, central bankers, governments and big speculators to create an
enormous market in paper silver, which has the most profound ramifications
for the price of the metal. The whole story will take your breath away. Smith
had a great line in his book about how great profit opportunities are rare,
but if you had the patience to read his message carefully you would see such
an opportunity in silver. Frankly, I believe this could be the 1970's all
over again. Once in private Jerome told me, we would see the day that silver
was worth more than gold. There's a chance he will be right.