Podcast

Harvey Organ: Get Physical Gold & Silver!

Gold & silver prices suppressed with prejudice
Friday, April 20, 2012, 6:10 PM
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Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010.

And he minces no words: Gold and silver prices are suppressed. With extreme prejudice.

In this detailed interview, Harvey explains to Chris the mechanics of how he sees this manipulation occurring, why he predicts this fraudulent pricing scheme will collapse soon, and why it's critical to be holding physical (vs. paper) bullion when it does.

The real suppression of the metals started in 1988. That’s when the leasing game started and was invented by J.P. Morgan.

These guys would go around to the mining companies and say, Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out. So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.

Once the leasing game came, the actual selling, the extra selling, suppressed the price. In the first five years, it started at maybe three hundred to four hundred tons. It didn’t start to get really bad until probably ’97-’98 with the Long Term Capital affair. And that’s when the leasing started to become around maybe 1,000 tons of gold. And it hasn’t stopped.

And silver is the same.

And that’s why you've had a long-term, 20 years of suppression of the metals. The problem now is that the physical is now gone. Where is going? It’s gone from West to East. 

A lot of people don’t know that China used to refine close to 80% of the world’s supplies of silver, because it’s very toxic. Up until probably 1985, the Chinese handled 80% of the world’s refining of silver. Now they're down to 40%, but that’s still a major part of China’s industry. They are keeping every single silver ounce they refine, and gold. They are keeping it for themselves; their reserves are rising (though they don’t tell exactly). Two years ago they went up to 1,054 tons and I can assure you it’s probably triple that now. These guys are not stopping. Just like they are not stopping in oil. They know what the game is, and they are slowly taking all their U.S. dollars that are on their shelf and converting them to gold, oil, copper – anything that’s real.

And the game ends when the last ounce of gold has left London – not COMEX, because in a nanosecond it will come back to here. 

The big problem in London is that their derivatives on gold are about 50 to 100-to-1. That’s the amount of derivatives. So if I take out that 1 ounce, the balloon around it – the derivative – is getting bigger and bigger and bigger until it’s ready to totally implode.

And that’s what you are seeing now. So right now, people are going to say: How high can it go? And I’m going to tell you: You are going to go to sleep on Thursday night and gold may be $1,670. And then you wake up the next day and it’s going to be a banking holiday. And gold will be $3,000 bid, no offer. No offer – and it will be a banking holiday. Because there will be a failure to deliver.

You’ve got to have physical coins or bars. If all you have is a piece of paper – that’s all it is!  It will just blow up in smoke.

So just go buy your physical and be thankful that you are getting it at a cheaper price today.     

Click the play button below to listen to Part I of Chris' interview with Harvey Organ (runtime 32m:36s). 

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To listen to Part 2 - Click Here.


Harvey received his Bachelor of Science degree in 1970 and an MBA in 1972 at McMaster University, majoring in finance. It was during this time period where Harvey got exposed to the derivative market that was just starting on Wall Street.  Harvey has been trying to expose the fraudulent manipulation of the gold market ever since  the "Long Term Capital" downfall in 1998.  It has been Harvey's duty to share what he knows and expose the fraud and educate the intricacies of of the gold and silver paper and physical markets, which he does through his website Harvey Organ's Daily Gold and Silver Report.


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372 Comments

Arthur Robey's picture
Arthur Robey
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Thinking about Thinking.

Plenty of evidence in this thread that strengthens Iain McGilchrist's thesis about the Left Brain's dogmatic model making.

If your model is wrong, ditch it.

You will survive the trauma.

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Yip, I used to believe the

Yip, I used to believe the Ted Butler and GATA stuff. I used to believe the KWN posts from the "London Trader" but when I recently listened to an interview with Andrew Maguire at TFmetals I became convinced the "London Trader" is actually Andrew Maguire. They sound awfully similar, even using the same figures of speech. What set alarm bells off in my head is when he started suggesting that people who sign up for his services make sure they take a portion of their profits and buy physical silver, because only by taking physical delivery would they bring the Cartel to their knees! The emotive rhetoric, the talk of taking bringing down an Evil Cartel and the idea that a handful of mickey mouse retail futures traders would save the day made me realize I had heretofore been duped.

I bought into arguments like the allegation that JP Morgan was short a gazillion ounces of silver, when there is no way they could reasonably deliver a fraction of it, painted them into a corner where they were forced to manipulate the prices lower. Two main problems I had were a) are the guys at JP Morgan really that stupid, to get into a postion like that in the first place? and b) if they fight rises in the price of silver by constantly "adding new shorts" and capping the price, why don't some other big players just keep adding longs and overwhelm them?

A while ago I read of a wealthy guy who speculated on an oil exploration stock, exploring for oil somewhere in cental africa. He had let it be known that he not only owned a lot of shares, but also had a large long single-stock futures position on the stock. Well, as soon as it was known, traders smelled blood and he was given a hiding. I read the interview with him where he admitted losing a fortune and regretted taking on such large leverage. Why wouldn't something similar happen to JP Morgan? How do they get away with it for so long?

Also, I found it hard to imagine that central banks would blindly continue to dispose of their physical gold reserves year after year (as GATA alleges) just to make the dollar look strong because surely they'd reach a point where they'd hold back and realize it was a losing proposition? But in these pages or links provided I've read about the effect of a mass of fractionalized unnallocated gold accounts, and just how many thousands of tonnes of gold are held in this way. This is not the kind of analysis I ever read from GATA articles.

Finally, how did these guys manage to profit (as is alleged) on such a lop-sided short position when the prices of gold and silver have gone through the roof over the past ten years? Is the Fed printing money directly to provide them with margin?

Even though I scratched my head over some of these things I figured the main story, as promulgated by GATA, Butler et al, was essentially true. The thing that has opened my eyes is the discussion of the LBMA and the OTC market. This gives a whole new perspective to what is going on.

Whether central banks are involved in deliberately pushing around the gold price to a small or great extent is still an interesting question, in my opinion. I still think it's plausible that some central banks have an interest in seeing that the gold price behaves a certain way at certain times. If they do, to what extent it happens, I am not sure, but GATA, Jim Sinclair, Ted Butler, the "London Trader", Harvery Organ don't have the answers. 

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bronsuchecki
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ETFs have the physical

Jim H wrote:

I, like many others.. still find plenty of evidence to suggest that there is a more direct link between the shares I own, and serialized Silver bars in a vault, in the case of PSLV, vs. SLV.  I will not say PSLV is completely devoid of counterparty risk... just that in the case of SLV... good luck even figuring out who the counterparty that holds the Silver actually is.

Warren at screwtapefiles has been downloading the various ETF bar lists on a regular basis for some time now and has a substaintial database. He is working on a very serious analysis of it to see if there is any proof the bar lists are faked. Preliminary discussions I've had with him says it is legit. When that analysis comes out it will bust the "ETFs don't have the metal" meme.

This was always a bit of a distraction anyway, as the real issue is the legals as discussed here http://goldchat.blogspot.com.au/2008/12/warning-on-existing-au-and-new-ag-pt-pd.html

PSLV may be better, but I certainly wouldn't be paying any premium for any ETF. You did well to get out. I actually struggle to understand why Sprott decided on a closed-end fund structure rather than an open-ended one due to the potential for premiums AND discounts (maybe tax advantages). On discounts, one day when the bull market is over and everyone is exiting, I will not be surprised to see closed-end gold and silver funds trading at a discount - investors are reliant to some extent that the operators will step into the market to buy the shares to ensure a fair price.

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Erik - can I safely assume

Erik - can I safely assume you are ignoring my query about why gold never rises above 2%?  I have asked you for commentary on it 2 perhaps 3 times now and....silence.  If you are unable to respond, I can respect that.  Simply defer to one of the other "experts" - such as Bron or Jeffrey.

As it relates to credibility, lets put the same scrutiny on Jeffrey Christian as you put on Ted, Harvey and others.  As an example - immediately after the debate at GATAs conference between Jeff and Bill.  Jeff did an interview with Kitco TV and stated that Andrew Macguire cant be trusted because the CFTC never acknowledged receiving any emails from him which was blatantly inaccurate as there were 2 exchanges between Andrew and the CFTC regarding that matter.

I have yet to this day heard any kind of retraction from Jeffrey regarding this.  Jeffrey was wrong - he made a blatantly inaccurate statement which was intended to suborn the credibility of an opposing point of view. 

By your standards - Jeffrey Christian belongs in the same category as Ted and Harvey and others.

Jeffrey Christians interview - 

!

Bart Chilton (CFTC Commissioner) even thanked Andrew Macguire for bringing the matter to his attention and has publicly stated that the silver market is actively manipulated and that the perpetrators should be prosecuted.

http://www.kingworldnews.com/kingworldnews/G+_Articles/Entries/2010/3/30_A_LONDON_TRADER_WALKS_THE_CFTC_THROUGH_A_SILVER_MANIPULATION_IN_ADVANCEBy_Andrew_Maguire.html 

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bronsuchecki wrote: Jim H

bronsuchecki wrote:

Jim H wrote:

I, like many others.. still find plenty of evidence to suggest that there is a more direct link between the shares I own, and serialized Silver bars in a vault, in the case of PSLV, vs. SLV.  I will not say PSLV is completely devoid of counterparty risk... just that in the case of SLV... good luck even figuring out who the counterparty that holds the Silver actually is.

Warren at screwtapefiles has been downloading the various ETF bar lists on a regular basis for some time now and has a substaintial database. He is working on a very serious analysis of it to see if there is any proof the bar lists are faked. Preliminary discussions I've had with him says it is legit. When that analysis comes out it will bust the "ETFs don't have the metal" meme.

This was always a bit of a distraction anyway, as the real issue is the legals as discussed here http://goldchat.blogspot.com.au/2008/12/warning-on-existing-au-and-new-ag-pt-pd.html

PSLV may be better, but I certainly wouldn't be paying any premium for any ETF. You did well to get out. I actually struggle to understand why Sprott decided on a closed-end fund structure rather than an open-ended one due to the potential for premiums AND discounts (maybe tax advantages). On discounts, one day when the bull market is over and everyone is exiting, I will not be surprised to see closed-end gold and silver funds trading at a discount - investors are reliant to some extent that the operators will step into the market to buy the shares to ensure a fair price.

Bron - as you are no doubt aware, there was an issue with CNBCs work in trying to "prove" that GLD actually has the gold they purport to have.  In fact, during the video the only bar they showed where you could see the serial number clearly was NOT a bar in GLDs inventory.  Screwtape did some analysis of this (along with ZeroHedge and others) and here is a link to Screwtapes findings...

http://screwtapefiles.blogspot.com/2011/09/zero-hedge-zj6752.html

Couple conclusions I come to.  Firstly - they are purported in a GLD vault, but, the bar they show belongs to another fund?  Who's vault were they really in?  Secondly, that bar that Pisani holds up and twirls around is 400 ounces - supposedly.  That seemed kind of light - a point that even Screwtape brings up.

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False, false, false

I guess three comments deserve some responses here.

1.      Jim H wrote….

”If you listen carefully to the CM interview, you can pick up one quick exchange that is a perfect example of the kind of useful observation that somebody like Harvey can make.. due to his closeness to the Comex, and long history of watching it.  He says, and I am paraphrasing here... that "deliveries used to occur in the first two days of the delivery month.. and now they spread them out all month".  The implication is that Silver for physical delivery is hand-to-mouth.  If you take a long term view of the decline of inventories of deliverable Silver, then his observation fits with these other facts in painting a picture.  Eric Sprott made the same comment last year when he made one of his (infamous) additions to PSLV.. how long it took to get the bars.. and the fact that they were freshly poured (date stamped).”  

Over the past few years shorts began delaying delivery into their Comex futures contracts into the end of the delivery month because they could earn nearly an extra month’s interest by leasing the metal out with no price risks. As lease rates fell they tried to squeeze every extra cent out of their leases. As prices rose, they were earning a lot more on the leases.

As I explained at the Silver Summit last year, assume that one is leasing silver out to fabricators at 3.0% per annum. In the first quarter 2010 silver was at $16.92 average price, and 3.0% interest meant $0.51/oz lease income per year, 4.25 cents per month. By the third quarter 2011 silver was at $38.86 average price, and 3.0% interest was $1.17/oz per year, 9.75 cents per month. (So much for pushing JP Morgan into bankruptcy by pushing silver prices up: Instead, they recorded record profits on their silver book in 2011. 

Since their short is a hedge of an offsetting hedge, they are price insensitive on when they deliver it. It was more profitable for shorts to wait until the end of the month to deliver into their short futures contracts. (Bankers earn more than conspiracy theorists because bankers seem to be more intelligent, and to think about the financial consequences of actions, seeking to maximize their revenue.)  

We explained all of this in our reports over the past two years ago, and to the investors who retain us as advisors and wondered why they were getting deliveries late in the month rather than early in the month.

Regarding Sprott: They got hosed. We spoke with Sprott people about their delivery problems, as well as with bankers. They handled it dreadfully, and did not require the banks to behave in standard market operating procedures. Why, we don’t know, but they did everything wrong the way many rank amateurs do. Sprott is an eminent salesman, however: He turned lemons to lemonade, saying not that he was an amateur in buying all that silver, over-paid, and was messed over in delivery. Instead, he said it was because there was a problem getting the physical silver. There was no problem with the silver; he just did not negotiate and handle the bank properly. No surprise there to anyone who has watched his funds over the years.

2.      Strawboss asked for an apology from me for saying the CFTC never acknowledged Andrew Maguire’s emails.

I don’t have to apologize for saying the CFTC never acknowledged receiving any Andrew Maguire emails because it has not. You have never seen any communication directly from the CFTC acknowledging that they received the purported emails in January and early February 2010.

What you have seen was Andrew Maguire or someone saying he was Andrew Maguire giving KWN, a known disreputable source of information, what that person said was a string of emails between Andrew Maguire and a person at the CFTC.

That person does not work at the CFTC as of now, April 2012, and the CFTC declined to verify he had been an employee in January and February 2010. So, he may never have actually worked there. (Science is based on reproducible results; I can call someone up and verify that he sent the emails. Frauds are perpetrated on the assumption that people will not try to reproduce the results, call to verify a person even exists.) Furthermore, look at the alleged responses: They are totally noncommittal. Mr. Maguire is saying he has all sorts of inside information. He is screaming the house is on fire, and that he has concrete evidence about something the CFTC has investigated rigorously for more than 20 years, and has published two unprecedented public reports about the matter. The CFTC’s response, according to Maguire’s papers is, “Thanks, sir.” One could say it is typical bureaucratic ineptitude, the sort that let Bernie Madoff get away with his Ponzi scheme for so long. It could be. One could say it’s because the entire staff of the CFTC is part of a cabal seeking to suppress silver prices. That seems unlikely. One can say it’s not even a real response from the CFTC. That seems reasonably likely. Or, one can say that it is a real response, and they have heard such BS before from what Erik T. accurately describes as charlatans, and said, thanks but no thanks. If the latter, it is strange that the CFTC never acknowledged that.

You probably have heard that sometimes disreputable people make up communications to try to prove a point. You read someone saying he was Andrew Maguire saying the CFTC had responded.

Turning to Chilton’s comments: If you listen carefully to Bart Chilton, as you must given the political nature of that person, you will see he did not thank Maguire for any emails, but for bringing the matter to the attention of the CFTC, which easily could have been a reference to the media circus perpetrated on the silver market by GATA after the CFTC travesty hearings on open interest limits. Chilton’s famous comment that he believes the silver market is manipulated often has the very important qualifying statement he made cut off by the charlatans: He said, based on information he had received from people outside of the CFTC (GATA and their ilk) that he thought the silver market was manipulated, adding that his view was not predicated on any information he had received from investigators inside the CFTC. (Anyone on a jury would want to know about those qualifying characteristics. Any ‘reasonable person’ as defined by law. Anyone trying to bamboozle his readers would want to drop those qualifiers off in the ‘editing’ process.)

So, it’s not time for me to apologize, because all of the evidence presented by the Maguires, Butlers, GATAs, Organs, and others has been inadmissible into any court of law, and would not pass the legal guidelines for a reasonable person to believe any of it. Which takes us back to where Erik Townsend started all of this: You are not dealing with reasonable people, you are dealing with True Believers of the first degree, and the propagandists who feed off of them.

One final point: To say that Organ is a good dude because he has told people to own physical gold and silver rings completely hollow. I have advocated holding gold and silver since the 1970s. I’m a good dude. Many others have too, including people like International Gold Bullion Exchange that offered to buy and hold it for you, only to prove to be thieves, back in the 1980s. I think we need a higher standard to measure whether someone is a good dude. It like: When did sliced bread become a measure of technological innovation? Can’t we do better than that?

Excuse me, but the markets beckon.


Jeff

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Manipulation of the PM Market

I'm just an old computer tech who operates on logic. It's logical to me that after MF Global, Goldman Sachs shafting their clients, robo-signing scandal, etc, etc, and all they any of them have gotten is a slap on the wrist fine that is a very small percentage of the amount they "stole". The PM and securities markets are being manipulated and the government won't do anything to stop it because it's being done by Wall Street banks that own our politicians and regulators. That being said I enjoyed the comments and learned a bit from them.

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Answers regarding Comex deliveries...

Jeffrey,  Thank you very much for taking the time here to describe an alternate explanation for Harvey's observation about delayed deliveries... the devil is in the details as they say.   

Although we (the CM.com community, with some help from me) ran an MMT true believer out of here about a month ago... I am really glad that we have been able to host this very touchy discussion in a constructive way... this would not be able to happen on the boards at TFMetalsreport, nor most other places where PM discussion happens.  By saying this, I am not saying that I am now convinced manipulation does not happen... I have yet to see any reasonable explanation for the non-economic dumping of contracts that result in waterfall declines that happen so often in the PM markets, not seemingly tied to any news...    I am though saying that my eyes have been opened to some of the complexities of these markets.. and for that I am appreciative.     

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In fairness

I must retract including Jim Sinclair in the list with Harvey Organ, GATA etc.

I know he does interviews with KWN, but I read this interview of him about gold and currency and in skimming eight pages he seems to give a lot of sensible answers without mentioning manipulation once. http://www.futuresmag.com/2012/05/01/jim-sinclair-has-something-to-say?p...

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Question

Jim H:  What's MMT?

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Thanks all

hucklejohn wrote:

Jim H:  What's MMT?

MMT = Modern Monetary Theory.

For a proper debunking of MMT, Please consider:

http://fofoa.blogspot.com/2011/11/moneyness.html

to all participating in the discussion - excellent thread, quite an eye opener to the metals markets.

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PSLV

Bron,

I actually struggle to understand why Sprott decided on a closed-end fund structure rather than an open-ended one due to the potential for premiums AND discounts

I think the answer is that he is the shark in the goldbug pond. He uses physical silver in his hdege fund in order to scalp the PSLV premium (in effect trading against the retail investors in PSLV):

http://kiddynamitesworld.com/pslv-sprott-files-to-sell-sold-to-you-sucka/

Sincerely,

Victor

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CPTWaffle wrote: Yip, I used

CPTWaffle wrote:

Yip, I used to believe the Ted Butler and GATA stuff. I used to believe the KWN posts from the "London Trader" but when I recently listened to an interview with Andrew Maguire at TFmetals I became convinced the "London Trader" is actually Andrew Maguire. They sound awfully similar, even using the same figures of speech. What set alarm bells off in my head is when he started suggesting that people who sign up for his services make sure they take a portion of their profits and buy physical silver, because only by taking physical delivery would they bring the Cartel to their knees! The emotive rhetoric, the talk of taking bringing down an Evil Cartel and the idea that a handful of mickey mouse retail futures traders would save the day made me realize I had heretofore been duped.

...

I still think it's plausible that some central banks have an interest in seeing that the gold price behaves a certain way at certain times. If they do, to what extent it happens, I am not sure, but GATA, Jim Sinclair, Ted Butler, the "London Trader", Harvery Organ don't have the answers. 

Excellent post, CPTWaffle. I want to first emphasize my own fallibility as I learned a little about the metals markets, and then see if I can persuade this group to revisit the discussion of Hoffer's true believer.

To be clear, when I first started following metals markets a few years ago, I was just as convinced as some of you are by the Ted Butler, GATA, etc. story. It seemed to make logical sense to me, and boy was I ready to believe that the banksters were up to no good. The manipulation story seemed to make perfect sense, and when I first heard about GATA, my initial conclusion was that these were really fantastic people who were doing a good thing by standing up for justice and truth. It wasn't until I really started to do my homework that I realized that all of GATA's allegations were specious and that the GATA principals' knowledge of the markets was actually shocklingly limited given their self-professed tenure in the business.

When I brought up Hoffer's True Believer, it probably came across as "Hey, you guys are all a bunch of true believers but I know better! Neener neener neener!" That was absolutely not my intent. The reason that I think Hoffer's true believer concept is so important is that it's what helped me figure out how I was falling victim to my own fallibility. It taught me that because we live in a time when there is good reason to question whether governments and bankers are perpetrating crimes, many of us have become so disenchanted that we are hungry for an alternate explanation that makes sense.

We all saw what happened with the subprime fiasco, including the fact that nobody to this day has been investigated never mind prosecuted. The MF Global fiasco has proven to me that we no longer live under the rule of law. We live in a society where a privileged few - like Jon Corzine - are literally above the law. These people have literally bought the right to do as they please, and regulators and politicians are scared to mess with them. It's a sad time in America, that's for darned sure. What I realized is that this makes us feel so frustrated - so helpless as we witness crime after crime going unpunished - that we develop a very strong emotional reaction. As Hoffer described, feeling like we are part of something - a movement that is about truth and justice - satisfies our emotional need to cope with the very obvious decay in the moral fabric of our society and the rule of law. The reasons to be disenchanted are very, very real. Unfortunately, that makes us more susceptible to believing a story that resonates with our feelings of frustration, and makes us less likely to scrutinize the evidence.

As I've said all along, I continue to look for signs of manipulation, because I remain absolutely convinced that we live in a society where some people are able to purchase immunity from the law. The harder I look, the less certain I am about whether there is or isn't manipulation going on in these markets. All I know for certain is that GATA, Butler, Organ, etc are peddling nonsense. That doesn't mean there is no manipulation; it only means that the people who are making noise about it don't know what they're talking about.

All the best,

Erik

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bronsuchecki wrote:On

bronsuchecki wrote:
On discounts, one day when the bull market is over and everyone is exiting, I will not be surprised to see closed-end gold and silver funds trading at a discount - investors are reliant to some extent that the operators will step into the market to buy the shares to ensure a fair price.

Bron,

Given the redeemability clause and the law of efficient arbitrage, I don't believe it's possible for PSLV to trade at anything more than a very, very small discount to NAV (equivalent to the cost of arbitrage).

Am I missing something?

Thanks,

Erik

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 A couple of points. This

A couple of points.

This first one may sound strange to those of you who don't know me. You should not assume that 'the banksters' are not up to tricks. They are. That's what bankers, and others, do. It's just not the tricks that GATA and those guys say they are. In that way, they are much more penny ante that the GATA boys would have you believe. In reality, they are much more smooth and successful, expressly because they do not go in for such large, unwieldy super manipulations. Bankers make their profits a penny or so at a time. They do so by overcharging half a percent or so on each of many trades. Don't assume that because bankers do not engage in giant conspiracies they are angels.

Remember: I quit Goldman Sachs in 1986, in part because I did not like the way they treated clients, employees, and others. I think Bron pointed out last weekend that there is a rich published record of me being a critic, a vocal critic, of banks and banking regulators. I have been an outspoken advocate of proper regulation of OTC derivatives since I left Goldman, in June 1986.

Seond, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments may prove to be the downfall of silver. Remember: I am long silver, in contrast to all those inaccurate disparagements of me that have me an enemy of the metal. In fact, I was telling our clients back in the early 1990s that silver would rise sharply at some point in the distant future. But back to Sprott: Look at what his molybdenum specialty fund did to the molybdenum price, the equity prices of moly producers, and the investors in that fund, in 2008 and 2009. I think that is indicative of what could happen in silver. Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.

By the way, today is the 25th anniversay of a tremendous rout in silver. On 27 April 1987 silver started the day around $9. It had been $5.25 - $5.50 in December 1986, when we issued a buy recommendation on silver. On 27 April it went from around $9 at the opening in Europe to around $11.25, and then down to $7.20, all in a day. The trading was so fierce that Comex had to close for a few days to match and settle all of the trades.

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 A couple of points. This

A couple of points.

This first one may sound strange to those of you who don't know me. You should not assume that 'the banksters' are not up to tricks. They are. That's what bankers, and others, do. It's just not the tricks that GATA and those guys say they are. In that way, they are much more penny ante that the GATA boys would have you believe. In reality, they are much more smooth and successful, expressly because they do not go in for such large, unwieldy super manipulations. Bankers make their profits a penny or so at a time. They do so by overcharging half a percent or so on each of many trades. Don't assume that because bankers do not engage in giant conspiracies they are angels.

Remember: I quit Goldman Sachs in 1986, in part because I did not like the way they treated clients, employees, and others. I think Bron pointed out last weekend that there is a rich published record of me being a critic, a vocal critic, of banks and banking regulators. I have been an outspoken advocate of proper regulation of OTC derivatives since I left Goldman, in June 1986.

Seond, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments may prove to be the downfall of silver. Remember: I am long silver, in contrast to all those inaccurate disparagements of me that have me an enemy of the metal. In fact, I was telling our clients back in the early 1990s that silver would rise sharply at some point in the distant future. But back to Sprott: Look at what his molybdenum specialty fund did to the molybdenum price, the equity prices of moly producers, and the investors in that fund, in 2008 and 2009. I think that is indicative of what could happen in silver. Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.

By the way, today is the 25th anniversay of a tremendous rout in silver. On 27 April 1987 silver started the day around $9. It had been $5.25 - $5.50 in December 1986, when we issued a buy recommendation on silver. On 27 April it went from around $9 at the opening in Europe to around $11.25, and then down to $7.20, all in a day. The trading was so fierce that Comex had to close for a few days to match and settle all of the trades.

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well said

Erik T. wrote:

We all saw what happened with the subprime fiasco, including the fact that nobody to this day has been investigated never mind prosecuted. The MF Global fiasco has proven to me that we no longer live under the rule of law. We live in a society where a privileged few - like Jon Corzine - are literally above the law. These people have literally bought the right to do as they please, and regulators and politicians are scared to mess with them. It's a sad time in America, that's for darned sure. What I realized is that this makes us feel so frustrated - so helpless as we witness crime after crime going unpunished - that we develop a very strong emotional reaction. As Hoffer described, feeling like we are part of something - a movement that is about truth and justice - satisfies our emotional need to cope with the very obvious decay in the moral fabric of our society and the rule of law. The reasons to be disenchanted are very, very real. Unfortunately, that makes us more susceptible to believing a story that resonates with our feelings of frustration, and makes us less likely to scrutinize the evidence.

Erik T,

Excellent points. Daniel Kahneman talks about this fallibility in his recent book, Thinking fast and slow.

We're all composed of 2 systems.

System 1 - fast, intuitive, and emotional

System 2 - slower, more deliberative, and more logical

Most of the time, these 2 systems work in harmony so things are okay. But there are times when a person can utterly surrender to System 1, therefore failing to apply logical coherence to their thoughts.

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MetalsFacts

MetalsFacts wrote:

Second, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments mayprove to be the downfall of silver. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.

Jeff,

You may have read this already, but in case you haven't: Antal Fekete wrote a nice article on Sprott's funds and silver volatility.

http://professorfekete.com/articles/AEF140YearsOfSilverVolatility.pdf

I quote from his article:

Beware of the fund manager, crying from his rooftop that the paper silver market is a joke, while down there under the roof he is selling paper silver at a 25% mark-up.

Victor is quite the cleaner ;)

His write-up on Why Credit suppresses the gold price is spot-on. 

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Jeffrey's comments on Sprott...

Jeffrey,  I have to question a few points you made regarding Sprott funds..  first, the existence of Sprott funds in Moly... why would you attribute causality to the existence of these funds at a time when markets of all kinds were dumping left and right?  Secondly, I don't understand your point,

Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.

Sprott Silver holds ~ 33M ounces... roughly the same ballpark as the deliverable portion of the Comex inventory.... which Gold and Silver bugs almost universally agree would be wiped out in a flash if/when the monetary SHTF... since it is only $1B worth of stuff.  That is a pittance these days.  I almost have $1B myself.. but I am saving it for some home improvements  : )   Also for context, remember that total yearly Silver mining brings 750 - 800M new ounces out of the ground... so to my mind... your point about the possible effect of 33M ounces on the markets is overblown.. and I don't even understand why the existence of the Sprott fund would drive liquidation, any more than any other holders of Silver.. I certainly understand how lots of people who own PSLV could lose money in a diving Silver market.. but you seem to be suggesting that PSLV could go somehow bidless in a way that would drive liduidation.. .what are you talking about?  Thanks, Jim       

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More food for thought...

I'd like to offer a few more observations, in hopes they might shed more light on why I am so convinced this is a psychological phenomenon.

Most humans develop an emotional connection to people they respect and whose actions seem to be aligned with the public good. We're also prone to becoming defensive and emotional if our "heroes" are tainted by others. When I first learned of the existence of GATA, I most definitely considered the principals to be heroes. Hard-working guys volunteering their time to work tirelessly to expose the evil-doing banksters - who could argue with that! And when I did more research and started to uncover overwhelming evidence rebuffing all their arguments, I was slow to believe it because doing so interfered with my emotional desire to keep my heroes up on a pedastal. Eventually, fact overcame rhetoric, and I figured it out.

Now consider this discussion thread. It began when I observed that Harvey didn't back any of his arguments with factual substantiation or even logical argument, and I debunked some eggregious factual inaccuracies in what he said, such as the nonsense about it being illegal for the futures market to set metal prices because they are only supposed to "discover" the price.

Now consider the response. Did anyone call foul on my reasoning, and say "Hey, this price discovery thing (or anything else I brought up) really is an issue and here's why..."? No. Over 120 posts and so far nobody has offered any logical argument to rebuff the substance of what I said. One poster instantly came to Harvey's defense, citing Harvey's passion, dedication, and work ethic. But nobody was questioning Harvery's passion or dedication - the point was that everything he says is nonsense. The barrage of posts coming to Harvey, Ted and GATA's defense was overwhelming. I was immediately accused of making ad hominem attacks on the personalities involved, when I had done no such thing. Even after I quoted the Dictionary.com definition of the word charlatan, several people said they didn't care what the word actually means - they still find it insulting and rude that I have (correctly, I would point out) labeled these people with that term. The minor detail that I backed my statement with facts and well-reasoned arguments didn't matter.

We've had quite a bit of very informed technical discussion in this thread. I learned how the real-time quote system for the OTC market works, and we discussed the GLD Puke theory, as well as several other very fascinating technical discussions. Victor not only impressed most of us site regulars with his knowledge, but even impressed Jeff Christian to the point he said so publically. Yet so far, 120 posts later, nobody has even tried to argue that Harvey/Ted's price discovery argument makes sense, or that the ratio of paper to physical transactions has anything to do with leverage, or anything else related to the actual debunking of the arguments posed by Harvey, Ted, and GATA.

And let's face it: I've offended several people here by being so outspoken with my own viewpoint. One would think that everyone who took offesne would be just itching to put me in my place by posting a well-reasoned argument for why the price discovery or leverage arguments really are legit, and why I'm wrong. But nobody has even tried to do so, 120 posts pater. One would think that Ted and Harvey (both aware of this thread because I e-mailed them the link) would be anxious to rip me to shreds by posting a well-reasoned argument defending their views, and showing me up as the Charlatan. Yet neither are willing to participate in the thread! In Ted's case, he sent me an angry reply telling me I should attack the message, not the messenger. In reality I had attacked his message (example: price discovery), and had not attacked the messenger in any way, other than correctly using the word charlatan to describe him. I even came to his defense in a very small way, by telling Jeff Christian that I think he's wrong to question Ted's sincerity, and saying emphatically that I'm convinced Ted believes every word he writes. Why would Ted ignore the substantive argument (about the message), and perceive nothing but a personal attack on himself?

I ask everyone to pretend you are looking in on this situation from outside, and have to choose from two possible explanations. One possibility is that I'm wrong and Harvey and Ted and GATA are right, but for some strange reason, despite the number of people who took offense at my argument, nobody has offered a retort of any kind against the substantive arguments I made. The other possibility is that a lot of people here have come to see these people as heroes who are working tirelessly to combat the evil fraud we all know exists. When our heroes are attacked, we tend to react from the strong emotion of loyalty, defending the people we look up to, by citing their legitimate merits (such as Harvey's indisputable passion and work ethic), while somehow ignoring the well-reasond, factual arguments proving that our heroes really are charlatans afterall.

One poster felt the need to go out of their way to emphasize that they didn't need me to teach them how to think critically. Was it really the case (as it appeared on the surface) that they found my passionate focus on the facts, logic, and reason, admittedly tainted with an aggressive tone, to be so horribly offensive that they felt it worth posting a reply just to make it clear they didn't want my help seeing the truly pertinent facts? Or is it possible that because I was aggressively discrediting someone they viewed as  a hero, an unconscious emotional reaction was triggered, causing them to need to find a rationalization to justify not listening to anything further from me, because I am the person who is threatening a well-entrenched wordview they have strong emotional investment in? Which explanation seems to make more sense?

Bottom line, there are still several people here who think I'm the big jerk on this thread. What I don't understand is, why don't you guys just put me in my place by explaining why Ted and Harvey's price discovery argument really does make sense, or why the ratio of paper to physical transactions on LBMA has anything to do with leverage? I mean, if you did that, I'd really look like an idiot and we could all move on. But not only has nobody offered a persuasive argument proving I'm wrong - nobody has even tried.

I submit that what's really going on here is that a whole lot of you are rightfully outraged at the corruption, cronyism, and fraud that has taken over the financial system. You can't do anything to fix it personally, and that really stinks. But you have mentally associated certain names and organizations with "the good fight" to expose fraud and injustice, which seems like about the most noble thing anyone could do. Then some guy (me) comes along and rains on the parade, pointing out that the people you've been viewing as heroes of the good fight don't actually know what they are talking about, and supporting those contentions with irrefutable facts and well-reasoned logical argument. But I've offended your heroes, and have therefore offended you. I contend that's why you guys are all so quick to come to Harvey and Ted's defense by attesting to their character, passion, etc. without even attempting to rebuff the substantive arguments I've made showing them up as charlatans.

I too wish that we had people doing what GATA, Ted and Harvey falsely believe themselves to be doing. But unfortunately, the evidence overwhelmingly suggests that these guys, while perhaps well-meaning, are just talking nonsense.

All the best,

Erik

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oil again

Hi again,

this discussion was so productive that I decided to try my luck with another question. On March 28, there was an open letter by Ali Naimi, Saudi oil minister, in the Financial Times. The following link should take you there even if you dont't have the subscription:

http://is.gd/8yLc20

He says about five times that the oil price is too high for **Europe** and that it is inflationary, and that Saudi Arabia has enough excess capacity, and that he wants the price down.

Several sources ridiculed this letter, saying that twenty years ago when Saudi Arabia wanted the price down, they pumped more, but now they are just writing an op-ed for the FT. But it seems to me that the matter is not that trivial.

A few weeks earlier (March 16), we had this:

http://af.reuters.com/article/energyOilNews/idAFL2E8EG73P20120316

http://ftalphaville.ft.com/blog/2012/03/19/928521/the-saudi-oil-sales-en...

Apparently there is an unusually large number of super tankers ready to leave the Persian Gulf for the U.S., but people say this sale has not yet been affecting the price. So are they delivering on a forward?? (about 18 months worth of oil in one go?)

Here is finally one of the articles that ridicules Ali Naimi's letter:

http://ftalphaville.ft.com/blog/2012/03/29/942361/saudi-arabia-resorts-t...

Take a look at the comments section and what Chris Cook writes:

"Furthermore, my take is that the Saudis and J P Morgan Chase have for three years been using Enron-style Prepay contracts to maintain what was essentially an oil peg against the dollar using distinctly un-open market operations via oil repos.

The problem with this central oil bank strategy is that it requires a continuing flow of funds from muppets into the market as the producers take excess profits out. It is also susceptible to shocks. The Libya spike/shock last year was weathered.

But the inflation hedging muppet money has been pulling out; inventory financing is sparse to absorb excess oil, and once these fleets of tankers - which are IMHO carrying oil of which Saudis are only the nominal owner - reach the US and title is eventually transferred, then things should get interesting.

Marshall Auerback recently made the point that quite a bit of the oil which has already flowed to the US in Q1 has not showed up as US inventory. My explanation for that is that this is because the Saudis nominally still own it.

I have been forecasting a market collapse before the end of Q2 2012, and I stand by that forecast in the absence of a major shock."

My question: Is Ali Naimi perhaps signalling **THE** shift in Saudi oil policy away from US$ pricing (and from supporting high US$ oil price)? I remember when I mentioned the nine extra super tankers to FOFOA, he said this looked precisely as he was expecting the agreement to end. In a situation in which the U.S. will accept the Saudi decision out of neccessity. Now the following is Chris Cook again:

"My take - I know for a fact that Marc Rich was in Tehran a few weeks ago, and it wasn't to take the air or go clubbing - is that Obama and Khamenei (who is now firmly back in control) have come to an understanding. Marc Rich is one of the few people trusted by Khamenei: don't forget that he was happily flogging Iranian oil to Israel for six years under the Shah, and another 14 years for his friend Khomenei.

That could be why Iran wrote within a couple of days of the election (which gave Khamenei political legitimacy over the Ahmadinejad oligarchic faction) to the 5 + 1 meeting to get the ball rolling again; why Obama suddenly became so clear that Iran were not going to have nukes; and why Khamenei was making comprehensive condemnations of nukes as a sin.

My scenario is that we will soon see Iran backing off - with as little loss of face as possible - to the very same concessions Cheney turned down in 2003 (when Khamenei called the shots) with the difference being that Obama will not insist upon regime change"

Which is consistent with FOFOA's idea. The 5+1 talks just resumed the other day and the message was that Iran may back off and not insist on doing the enrichment themselves. (We also know that Switzerland will not enforce the embargo as it was not a UN decision - remember Switzerland is a virtual oil hub, Glencore, etc).

I know this is 90% speculation, but what is the opinion on the oil market? Does this mean we won't get a war in the Middle East, that oil in US$ will substantially go down and the gold-oil ratio up and the U.S. will accept it? Then we should pay attention to the next OPEC meeting (in June?)

Sincerely,

Victor

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Erik - all you commentary

Erik - all you commentary and silence on the 2% issue...very telling.

You state that "everything that Harvey Organ says is nonsense".  He says to buy physical metal.  Is that nonsense?  Or are you engaging in an ad hominem attack on Harvey?

You are a proponent of people buying GLD.  You seem to be a proponent of the school of thought that what appears to be manipulation can simply be explained away as arbitrage - or if there is manipulation - its relatively minor - i.e. a few cents here and there - because after all - thats how banks work.

I like to keep things simple.  My "worldview" is that the US is the dying empire that forces the rest of the world to exchanges its goods and services in exchange for pretty green pieces of paper.  If they dont - we deliver democracy (ala Iraq, Libya, etc...)

Gold is the antithesis of the US dollar and its valuation is a report card on the US.  When gold rises - it signals a bad grade.  Of course everyone understands this - even the people on the street know that gold rising means bad juju.

So - gold must be managed at all costs.  A thorny problem in the side of the power elite is silver.  Gold and silver always trade in tandem to each other over any reasonable timeframe.  They rise together  - they fall together.  Of course silver is far more volatile in its moves.

From their way of thinking - if they can get silver to fall - gold will follow.  Its a very small market and should be susceptible to their machinations.  Or so the thinking goes.  Its far easier to manipulate the price of silver than it is the price of gold (smaller market).

Switching gears...

It is said by some that interest rates swaps are the tool that is used to keep interest rates low.  Without them, rates would be far higher than they are and that would be an untenable situation considering the level of indebtedness the US carries.  So, essentially the thinking goes that these IRS's are the manipulative tool used to suppress things so the show can go on.

Taking the same thinking into the silver market - I wonder if the same strategy is in play, i.e. using derivatives as a means of suppressing the price. 

http://www.bis.org/publ/qtrpdf/r_qa1012.pdf  (bottom of page 124). 

Jason Hommel has done some work with this line of thought and I would be interested in yours (and others) comments on this.

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Dear Strawboss

I don't know why Erik isn't replying to you (maybe he isn't interested in the the issue) but since you keep asking I'll give you my two cents.

The fact that gold rarely rises above 2% in a day speaks to its stability. Currencies also tend not to trade with the kind volatility that commodities experience.

Also, if the COMEX were the main venue for source of funds into the gold market then maybe you would experience price swings no different than corn or soybeans. For what it's worth, I don't have a clue what the volatitity of corn or soy beans is like and I'm not going to look now, I'm just going to go out on a limb and assume: greater than gold.

The difference between other commodities and gold is that gold (and silver, but I think mainly gold) are traded in the OTC market, deposited into unallocated accounts and fractionalized and all in all there are many greater quantities of gold trading OTC than on the comex. Any big price divergences on the COMEX are arbitraged away. And since there is therefore such greater quantities available for trading on LBMA and in the OTC market, well, smaller investors won't move the price of gold so much as other exchange traded commodities. Basically, bigger market than other commodities = less volatile.

My question is: why would you expect it to trade at a volatility of greater than 2%? What requires it to behave so?

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Erik Wrote: And let's face

Erik Wrote:

And let's face it: I've offended several people here by being so outspoken with my own viewpoint. One would think that everyone who took offesne would be just itching to put me in my place by posting a well-reasoned argument for why the price discovery or leverage arguments really are legit, and why I'm wrong. But nobody has even tried to do so, 120 posts pater. One would think that Ted and Harvey (both aware of this thread because I e-mailed them the link) would be anxious to rip me to shreds by posting a well-reasoned argument defending their views, and showing me up as the Charlatan.

I'm not offended and I'm sure Harvey and Ted aren't either. They just don't care. Everyone is entitled to an opinion. You are just coming off as arrogant and rude so why bother.

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Jim H

Jim H,

You asked about my comments on Sprott's fund being a hole in the armor of the silver market. I may be over-emphasizing his fund's size. I thought he had more metal. Regardless, he has other funds with too large of positions in silver mining shares to be easily liquidated, and Sprott as a company has shown itself to be like a rat on a sinking ship in other markets (and silver): They dump as soon as things look ugly.

Actually, the issue is more ETFs. I am on record for years as warning that the mechanical nature of physical metal ETFs management is a big risk to these markets. In fact, there was a commentary that we wrote presumably confidentially to the SEC when it was first considering permitting silver ETFs that somehow became public about some of the risks we saw. One was this.

Hedge funds, in contrast to public ETFs, have an orderly liquidation process. You have to signal your intention of redeeming shares typically 60 to 90 days in advance, to give the manager the opportunity to liquidate positions in an orderly fashion to match the upcoming redemptions. Physical ETFs do not have such management discretion. Investors go only and sell shares. If the sale is not met by ready purchase orders in the market, the market makers have to buy and hold them in the market. The market makers generally will redeem heavy sales flows (see what happened in the first half of May last year, and, on a smaller level, what happened in April last year). If investors say sell, or click the sell button on their computers, the managers of the ETFs have to sell at that time regardless of the price. So, prices could cascade downward in such an event. Obviously the SLV is the biggest worry, with 312MM oz, but the others could be worse, insofar as they may be sold in less liquid markets. PSLV has only 32 MM oz, so it is somewhat less worrisome, but I also am focusing on the silver mining shares held by other Sprott funds.

Jeff

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PS Strawboss I'm just trying

PS Strawboss I'm just trying to offer a sensible answer and apply what I've been learning here. Maybe my answer is off and someone should correct me.

My understanding that much greater traded amount of stores of a partiulcar commodity and volumes traded of a commodity seems to me would mean it should be less volatile than one with smaller stores and lower volumes. I think this applies to gold, certainly based on what has been revealed about the OTC market.

Cheers

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I not persuaded

Reading this thread leaves me shaking my head in disbelief. All that sound and fury about how there really isn’t any manipulation of precious metals. Meanwhile people dance around the elephant in the room and dare not look his way. What is the name of this site? Who hosts this thread? Who invited Harvey Organ here and respectfully interviewed him? Does he think metals are manipulated? Why look what we have here. This is just the most recent example of many. http://www.peakprosperity.com/blog/gold-manipulated-thats-okay/72892

Now Chris does not work as a professional in the metals markets. However he does have an MBA, majoring in finance, from an Ivy League university. He has extensive experience as a sophisticated investor in multiple markets, with 10 years in gold and silver specifically. He is confident enough in his knowledge to hold 75% of his assets in this sector. He has watched the daily action long enough to spot anomalies. As the creator of the Crash Course he has demonstrated his ability to draw sound conclusions from confusing data.

How does Chris’ knowledge compare to the “experts” who work in these markets? Well you can’t beat an expert at his own game. They can argue you to death with the intricate details that can only be know by insiders. I know from experience as I’ve been on both sides of that proposition. However, the “experts” will usually be the last to admit, even to themselves,  that they make their living from a rigged system, because it makes them look bad, and scares away customers.

If you are inclined to bash Harvey Organ for what he said in the interview, you might want to listen to it again. You may notice that much of what Harvey said was a confirmation or elaboration of things Chris said he had noticed from his own experience. People who profess admiration of Chris and his work, and may pay a sizable subscription fee for it, have some explaining to do when they assert that people who think precious metals are manipulated are either, dumb, naive, or misguided.

Those of us who are not “insiders” can’t answer the manipulation question conclusively. I think it is incorrect to ascribe every market action to manipulation. I also think it is wrong to say serious manipulation doesn’t exist. I have to reconcile what more knowledgeable people say against my own observations as an investor. On that basis Chris’ views are much more credible, and have not been refuted by what I have seen in this thread. If he changes his mind I will listen closely. And no I don’t have an emotional attachment to Chris as a “hero”. But I do consider him the most trustworthy source.

The name calling and personal attacks seen in this thread, however they are rationalized, greatly detract from the credibility of some of the arguments presented. Effective debate is based on persuasion not denigration.

Travlin

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False Mr Christian?

Regarding your Point No. 2 presented under the heading False, False, False, re Andrew Maguire and the CFTC never acknowledging receipt of his emails: 

CFTC commissioner Bart Chilton said, "I'm appreciative of the information Mr. Maguire provided and I'm glad it was introduced into the investigation."

Read more: http://www.nypost.com/p/news/business/metal_are_in_the_pits_2arTlGNbMK7mb1uJeVHb0O#ixzz1tOh6LuzO

Based on some of your comments here I do think you get a bad press in the metals blogs, and possibly unfairly so, but this sort of thing could partially explain that.

SR

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Mr Christian, maybe not false?

The Maguire emails were purportedly sent to Eliud Ramirez.

Your comment: "That person does not work at the CFTC as of now, April 2012, and the CFTC declined to verify he had been an employee in January and February 2010. So, he may never have actually worked there".

Well, a moment's analysis of that statement turned up this: http://www.cftc.gov/PressRoom/PressReleases/pr5873-10

You, and readers, will note that Mr Ramirez gets second billing in this CFTC press release of August 2010 detailing the success of an investigation (based on traders being overheard boasting of manipulation, no less), whcih started in January of 2008.

You would also be aware that the emails were cc'd to Mr Bart Chilton. Did he ever, or does he still, work at the CFTC?

After you have apologised for repeatedly attempting to mislead people, elsewhere and in this commentary, would you please address yourself to a matter on which you could truly assist, rather than distract, this audience: is silver manipulated?

SR 

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more input

Somebody I know on another discussion forum, commented this which I quote literally:

[1] Ignoring capital costs, diesel fuel is actually the vast bulk of the running costs of a mine as most often the required electricity is generated by on-site diesel generators. This is simply due to the fact that mines tend to be in remote places.

[2] Strawboss wrote that with a switch to NatGas, the mining industry's EROI will change for the better. Maybe until the gas gets out of the ground. It is much more expensive to transport to the minesite (per joule) than diesel. In any case, NatGas infrastructure is simply non-existent in many parts of the world.

[3] I have a close friend who is a high level player (partner) in XXXX Non-Ferrous Metals Group (one of China's largest non-Fe metal miner/processors) with resources and processing all over the world. They won't touch gold anywhere but in China due to "political risk". He says quite openly that Gold mines will be nationalized, and not just in Australia & Canada. Only a question of when.

Victor

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It seems Mr. Organ refuses to participate as well

Sigh...

Harvey Organ wrote:

From: Harvey Organ
Sent: Saturday, April 28, 2012 5:34 PM
To: Erik T
Subject: Re: Disappointed you haven't participated in your own comment thread

I will not participate if Jeff Christian is participating.

On Wed, Apr 25, 2012 at 10:51 PM, Erik T wrote:

Hi Harvey,

 

I hope this finds you well. I’m writing to make sure you are aware of the very lively conversation in the comment thread in reaction to your recent interview with Chris Martenson. Quite a few notable personalities from the precious metals industry including Bron Suchecki and Jeff Christian are personally participating in the discussion, which is rather unprecedented for an open internet discussion forum.

 

I have to wonder whether you’re aware of the conversation, because frankly your credibility is being challenged by several people, including myself. While I make no apology for criticizing what I see as bogus commentary, I also feel it’s wrong to talk about people behind their backs, so I wanted to make sure you were aware of the discussion.

 

When I was recently interviewed by Dr. Martenson myself, I felt obliged to keep an eye on the comment thread, and to answer any questions that came up there. It’s disappointing that you have so far chosen not to participate, and I hope that you’ll feel inclined to come join the discussion and defend your contentions from the interview. The link is http://www.peakprosperity.com/blog/harvey-organ-get-physical-gold-silver/73933?page=0#comments. Please come join the conversation!

 

All the best,

Erik

Could it be that Harvey and Ted are afraid of a debate where someone knowledgable is participating? Naw, Jeff Christian is a "lightweight" - I know, Ted Butler told me so...

Erik

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Troy Ounce
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It is all about "trust"

So there are about >170 currencies in the world and we all agree that CB manipulate these currencies to weaken or strengthen them for whatever reason? Front page news as Swiss banks sell CH-Francs & nobody cares.

Only gold (being a currency as it is traded on currency desks of the big banks, not the commodity desk) is apparently not being manipulated? Am I missing something?

A low gold price means everything to CB; a high gold price means "mistrust" and the beginning of the end of the system. CB knows this very well, you know this and of course people "eating from the system" will vehemently deny this. There is a very strong reason for this denial because even writing about it might give credibility to the initial statement.

Therefore, gold price manipulation is the raison d'etre of CB, next to controlling inflation or price stability. And of course CB’s are not going to admit this aided by their True Believers.

The discussion on this post has to do a lot with "trust". Eric T pulls his hair out reading about John Corzine, etc. but cannot or does not want to make the link to a the bigger system based on fraud, racketeering and manipulation to serve the few. Is it because he is a "True Believer"?

His statement that the gold price went up because of Central Bank printing (only) is also difficult to understand. He forgets (?) totally the historic fundamental of gold for the last 2000 years which is that gold is used as a shelter against corrupt financial and political leaders. Does a higher demand also have something to do with a higher gold price, perhaps?

Again, the "trust" story. Who do you think has your best interest at heart: the possession of physical gold or your present political & financial leader?

The big question is: who do you trust? Not “who do you believe”. Trust is earned. Make you pick.

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@ Troy Ounce

Simple. Concise. Correct.

btw, interesting that CBs are generally regarded domestically as benign forces. Until they are not.

http://www.lietaer.com/2010/01/complementary-currencies-in-japan-today/ ...600+ currencies in Japan alone. As the CBs lose control, local currencies re-emerge.

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S Roche
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Dear Mr Christian

While waiting to hear back from you on whether you would apologize for your attempt to discredit Andrew Maguire by claiming in regard to Eliud Ramirez, (to whom Andrew sent his emails*), "he may never have actually worked there"(CFTC)...

http://www.cftc.gov/Search/search?client=cftc_V01R01&output=xml_no_dtd&proxystylesheet=cftc_V01R01&sort=date%3AD%3AL%3Ad1&entqr=3&oe=UTF-8&ie=UTF-8&ud=1&filter=0&site=pressrel&q=Eliud+Ramirez&search-press-submit.x=14&search-press-submit.y=9

Which records several pages of press releases detailing Mr Ramirez's work for the CFTC including January 28 2010. The emails started on January 26. You introduced this topic, apropos of nothing anyone else had said, so I think you should respond in order not to be judged along with Harvey Organ, who apparently is refusing to defend his integrity.

SR

* some were copied to a B Chilton and a G Gensler...who do work at the CFTC, that was a trick question in my last comment to you on this subject.

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Still no apology necessary

Hi S Roche

I think Jeff Christian covered his bases  in his reply and unless new evidence comes to light, he is justified in holding back his apology.

He admitted that it's possible that CFTC did receive the emails, but essentially said "thanks, but no thanks."

It seems we're conflating issues here: Andrew Maguire's trustworthiness (and Jeff Christians's responsibility to apologize) does not hinge on whether the CFTC did or did not receive his email. It hinges on the validity of his allegations. 

Why can nobody verfiy that this guy used to work for Goldman Sachs? Here you have a guy who claims to have worked for one of the most prominent investment banks but nobody remembers him? If he did work for Goldman Sachs, nobody would be question it. Some colleagues would remember him, there would be records they could publish, something.

Doesn't his war cry to 'form an army' and take down the Cartel make the hair on your neck stand up a little?

He is doing very well for himslef, charging $500 a month per client. I wonder how many new clients signed up because of his recent call to form an army? 

Troy Ounce: you say this is all about trust. Exactly. I don't trust people who give investment advice but make factually incorrect statemets (Harvey Organ) or who people who have such a murky history that I cannot actually verify their personal details, let alone track records (Andrew Maguire).

With regards to Jeff Christian, everyone can verify his employment history, his comments on gold and silver going back for many years, his warnings, his eplanantionsof complex things like lease rates and deliveries etc etc. What useful, enlightening insight Andrew Maguire provided us with for free? Besides repeating what Ted Butler, Harvey Organ et al have been saying for years?

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re Production Costs and Energy

Several pages back, MetalsFacts wrote:

The average operating cost of production for gold in the world at present is around $670 per ounce. Full in costs, including discovery, finance, corporate overhead, interest rates, depreciation, etc., are around $800, maybe $850 per ounce. So, gold mining on average at present is returning about a 100% profit. There's a long way to go from current prices before production would be constrained. 

I have a close friend who was a senior geologist and moved up to managing gold mines in Australia, South America, North America and Africa. He told me that costs are divided into cash expenses and capital expenses. He more or less concurs that operating cash expenses are around the US$600 mark pretty much in any mine. However the "capital expenses" are usually understated and the actual total costs per ounce comes in between $1000 and $1300. The real bottom line profit margin is more like 15% than 100% in many cases. He says a sustained drop in gold price much below US$1500 per ounce will start to see mines mothballed and production cease. For that reason, miners believe there is a higher floor to gold prices than many think.

Energy costs are about 30% of cash expenses or around $180/ounce currently.

The reason that "capital expenses" are understated is the way miners go looking for capital investment to open new mines. They write a prospectus to financiers hilighting the cash expenses and hiding the real capital costs in the fine print, thereby giving the impression that the investment is safe.

This information was given to me over a beer, but it was from the horses mouth.

John

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@ CPTWaffle

1. I cannot find one instance where AM claimed to work for GS. Others say this, please show me where he says it.

2. The CFTC responses in the emails read to me as a standard acknowledgement by a bureaucrat, neutral. I supplied evidence of press commentary by CFTC Commissioner Bart Chilton acknowledging and thanking AM for his information so I cannot see at all where the "no thanks" you suggest comes from. 

3. JC said in this commentary that one of the reasons that AM is not to be trusted is that Eliud Ramirez may never have even worked for CFTC...I have supplied sufficient evidence that this new claim, made here, is nonsense and brings JC's credibility into doubt, not AM's. Hence my support for the calls for an apology.

4. The point about the allegations is the key, JC ignores this and attempts to distract from the real issue with non-sensical questions raising false doubts about AM's back-ground. You make my point (previously made) for me.

5. I sense this renewed gratuitous attack by JC on AM may be more an attempt to harm this latest trading venture, which is not for me but I happen to be familiar with the trading style AM uses. It is a comparitively low-risk trading style in that market which has a track record of profitability. My knowledge colors my perception of this venture.

As a professional in the industry I think it is appropriate to hold Jeff Christian to a higher standard than the normal blogger and request an apology. Any blogger who had made the indefensible claims made by Mr Christian here in respect to Andrew Maguire would be subjected to villification.

Thank you for your commentary on my commentary directed to Mr Christian.

SR

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A Few Observations

1) Erik Townsend has now ignored 4 times Strawboss's question regarding gold not going more than 2% on any given day (except for a meager amount of times which you can probably count on one hand) during an 11 years bull market in contrast to crashing many times 3-5%. I'm asking Erik as well as Jeff Christian (who has also ignored this issue): Is this a normal behavior for such a powerful bull market and if so, can you please provide historical references (i.e. other bull markets in history which behaved in the same way).

2) Emotional Arguments: Mr. Townsend has claimed that his bashing-targets have been using arguments which appeal to the emotional needs of their followers rather than logic and reason. Yet from his very 1st comment he has been engaging in blatant name calling (please go back to that 1st comment and count how many times he has used the word "charlatan") which by design are intended to rile everyone's emotions. If your arguments really stand alone on the basis of reason and logic than why even go there? Why the need for personal attacks and to rile your readers emotionally?

3) Both of you (Eric Townsend as well as Jeff Christian) have singled out certain individuals yet have refrained from attacking others who are also proponents of the idea of market manipulation. Why the double standards? Would any of you dare calling David Morgan a Charlatan? How about Jim Sinclair? Eric Sprott? James Turk? Keith Neumayer, the CEO of First Majestic or (hmm) Chris Martenson whose website you're currently using? Btw, another question for Erik and Jeff: How 'bout John Nadler? and Dennis Gartman? Are they real experts or charlatans? Please comment regarding each of the individuals above.

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Troy Ounce
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Do not hold your breath.

While there may be "true believers" in the gold bug fraternity, there are many, many more "true believers" in a fraudulent system set up to service the chosen few and very happy to look the other way because they are munching from the trough of unlimited money.

Don't hold you breath.

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ivars
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Silver prediction chart:manipulation has not changed for 10years

Excellent discussion, very informative and full of learning (except of few personal attacks/fights).

Here is a silver price  prediction chart I made on March 13, 2011 (red line) and after predicting correctly crash in May 2011 and September 2011 corrected a bit its time scale in October 2011 (green line, or line that does not shoot up in April 2012): (use right click-view image to see the numbers):

i will explain how I made the chart that proved quite succesful so far - actual prices in blue-everyone knows where they are at the end of April):

As I made my silver chart as a copy/paste from about 10 years past silver action at some point which before that point matched in pattern the pattern before March 13, 2011, and the silver bubble in May I saw coming, just changing time/value scales to match the current scales, and PROJECTED forward i.e. copy pasted its part that went beyond the matching part, i can say that due to the charts accuracy so far:

The markets at that point of time and in that time and value scale were manipulated almost EXACTLY in the same way as TODAY.

Does not say much for increased manipulation argument. In fact, the pattern I took from past was in much smaller time/value scale, almost unnoticeable.

What was common , though, both before current (after 2008) and then market action there was a shock event that brought EXTREME cooperation (groupthink, herding) in all markets that later , in silver market, deco operated (individual participants looking after their interests in more and more divergent ways)  in the same way, producing the same pattern.

What my idea was, each market as a system has its distinctive way to decooperate ( seen in price over time chart pattern) after shock events, which should more or less repeat itself every time these shock events lead to ultimate freezing, or herding, of market at question.

Similar to an eg analog electronic circuit: by putting a delta impulse at the input, the circuit based on its internal "black box" structure will give similar output every time, on any scale as long as it stays linear ( i.e. input amplitude is not too big/small). The black box action on delta impulse or sharp loss/gain in value= Heaviside step function ( shock event) will then be described by a single analog parameter =chart =so called  transient response function.

If the system ( market) internal structure (and that includes everything)  does not  change much during time, it will always respond the same way. Well , of course, real shocks differ very much, but some of them are so strong that action on market can be considered similar.

Ivars

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Is Jeffrey Christian really an "expert"?

If Jeff Christian is such an expert that mining companies pay for his expertise, I would be interested in knowing precisely which mining companies he is consulting with and what their results are in contrast to their peers.  I would assume that if Mr. Christian is the expert that Erik makes him out to be, he should have multiple examples (or at least 1 or 2) of companies he has strategically consulted with which has allowed them to optimize their profitability on behalf of their shareholders.  These results should be demonstrably better than other comparable miners and we would likely be familiar with the performance of said miners - and if not - would like to.

If Mr. Christian isnt able to provide that information - I would challenge the veracity of the label of "expert".  That seems reasonable to me as it is analogous to demanding that Andrew Macguire provide certain information to demonstate his bonafides.

Switching gears...

I very often hear talk about a persons reputation, background, who they have worked for, etc... as a way of vetting them (are they credible, are they an expert, etc...)  My own personal experience is there are many people that are incompetent, lazy, or just plain stupid.  But, if you look at their resume or view their profile on LinkedIn - you would think they were great.

It makes more sense to me to evaluate what a person says in the context of my own understanding about the subject matter.  Then - to seek out other viewpoints so that I can compare and contrast.  That process serves me much better than relying upon a "groupthink" opinion that so and so is an expert or because someone went to a certain school or worked at a certain company somehow makes them credible.

Strawboss

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Normal 0

29 April 2012

First let me apologize for what I actually have done wrong. I apologize for not stopping all of my important work on Friday and undertaking a thorough investigation as to whether Eliud Ramirez had worked at the CFTC in 2010. Instead I only reported what the CFTC had told me when I called them to verify his past or present employment there. As someone who was an investigative reporter briefly in the middle of the 1970s, and as someone who has made his life’s work and fortune out of making sure that the information, data, statistics, and knowledge on which I base my conclusions were the best possible set of information, I was wrong to rush to tell you what the CFTC had said without squandering another five minutes of my time on checking out that he did in fact work there. That’s the price I pay for allowing myself to be distracted by such, well, distractions, sideshows to the real gold and silver markets.

I will not apologize for questioning the authenticity of Andrew Maguire’s bona fides. He owes the world credentials, and has gone out of his way to not provide them. What is he hiding?

Second, to the person who pointed out that he had not heard Andrew Maguire represent himself as having worked for GS, only his handlers: So what? I see that happen all the time, in politics. Ron Paul is very careful about not saying certain things, but rather having people aligned with him say them. Plausible deniability. One is measured, in part, by the company one keeps. I have not heard Andrew Maguire say anything, as I try to avoid the carnival sideshows while I focus on the real markets. (You will sense a theme here, if you have not done so already.)

Now, to the important point: The key point is that you have seen nor heard NOTHING from the CFTC verifying the communications Andrew Maguire says he had with them in January and February 2010. You ONLY have seen his representation of that. Do you not realize that? It’s a classic practice of scam artists. The information you, the world, has received about this would be inadmissible as evidence in a court of law. Why would you settle for a lower standard?

S Roche wrote: “3. JC said in this commentary that one of the reasons that AM is not to be trusted is that Eliud Ramirez may never have even worked for CFTC...I have supplied sufficient evidence that this new claim, made here, is nonsense and brings JC's credibility into doubt, not AM's. Hence my support for the calls for an apology.” The comment that the CFTC would not verify that Eliud Ramirez worked there is the absolutely least significant argument I supplied. For you to say that I based my assertions that Maguire is a fraud on that is to either ignore what I said or display a massive problem with reading comprehension. Sorry if that’s too blunt, but I have never understood what that saying means about suffering fools lightly. I don’t suffer fools lightly, especially when it comes to casting aspersions on the markets in which I make my living.

All of this is a giant distraction from what is really happening in the global economy and markets.

Someone said he had not seen any discussion about the actual substantive issues here: Is the silver market manipulated. I assume he was referring to this set of comments, because there are enormous bodies of evidence that suggests there is no massive ongoing suppression of silver prices. There were the 2004 and 2008 CFTC investigations. There has been others stuff.

I do not know if that breaks the apropos of blogs, but let me suggest people go to CPM Group’s website. You will find massive amounts of free research and analysis on issues that really are important to the gold and silver markets. You also will find a section in our Free Library that provides some documents about silver conspiracies. Summary reports on those two CFTC investigations are available there, along with other documents related to silver conspiracy theories, a presentation I gave on them in 2008, and a copy of a letter Ted Butler wrote to Richard Thornburgh, then Attorney General, in 1989.

Perhaps of greater interest is a link there to a video CPM made about Silver Conspiracy Theories in September 2008.  CPM had made a presentation in June 2008 to an industry group on the topic of Silver Conspiracy Theories. Several people expressed the view that it should have been videotaped and posted on the internet. As a result of these suggestions, CPM Group made a video related to these topics, which was posted at the Kitco website in September 2008. That video is available at the Kitco archives.

CPM Group’s website address for Counter-Arguments to Silver Conspiracy Theories

http://www.cpmgroup.com/category.php?ID=8

Note: CPM is preparing to launch a re-designed in May 2012, and the address to this page will change. The page and related documents will be available at CPM Group’s website, but at a new address.

The Kitco video link:

http://www.kitco.com/ind/jeffreychristian/jeffreychristian2008-09-17.html

A couple of other points:

Someone mentioned capital costs, saying a geologist told him there were high, around $1,000. They are that high at a few poorly run mines. The average globally last year was around $150 per ounce. That’s not a guess over beers. That is the calculation derived from a thorough quantitative analysis of mines that account for something like 80% of global mine production. That’s the average. If there are a couple of companies with non-cash costs around $1,000, and there are, that average means there are a lot of mines with far lower capital and overhead expenses. Actually, the average is close to typical. The number of mines with $1,000 or so in capital costs are very few with relatively low production: The low production levels in terms of gold being produced at a given mine is what gives them a high per-ounce cost. If they were larger mines, the capital costs would be spread over more ounces and would be commensurately lower.

Someone keeps referring to some comment about how gold prices never rise more than 2% in a day. I will be honest here: I have only paid cursory notice to much of the commentary here and, knowing Harvey Organ as a source of unreliable hearsay, I paid no attention to his interview. So, I don’t know what price bases he was using or what calculation, but I took a very quick glance at the nearby active Comex gold futures settlement prices since 2009, and the day-to-day change in the settlement price was more than 2%, plus or minus, around 30 times, or something like 3.6% of the days since the start of 2009,

Finally, someone just posted something saying that Erik T. and I seemed to be selective in our criticisms of various people. They listed several people and asked what we think about them. Jim Sinclair has been my friend since the 1970s; when I was trying to decide whether to go somewhere else after watching the 911 attacks four blocks from my office, Jim was the only person in the metals business who was able to talk me off the ledge and bring me around. Dave Morgan I count as a friend, and have been at times befuddled by his willingness in public to try to straddle the conspiracy topic, saying sometimes he thinks there is manipulation and sometimes there is not. He does say much of what I say: Yes, traders come in a slam the market at times, trade in ways aimed to gun stops, etc. These are short-term, immediate strategies. I think he would agree with the two CFTC studies, me, and others that there is no basis to believe there has been a massive on-going effort to suppress silver prices. In fact, it was interesting that in 2008 even Butler was backpedaling that view, saying instead that there was just too much concentration of shorts among a handful of banks. It was only in October 2010, when Sprott was preparing his PSLV launch, that the conspiracy re-discovered the argument that there was a massive effort to suppress silver prices. BTW, does anyone believe it was a coincidence that the complaint alleging JP Morgan was suppressing silver prices was filed in US courts the day before the Sprott PSLV was launched. If so, you are not much for believing in conspiracy theories, are you. ;-)

I save my criticism for those who seek to distract investors from what really is going on in the market, and seek to defraud them by perpetrating lies, in my view knowingly.

Good night. Monday will be busy, and Asia already is open for trading.

Jeff

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MetalsFacts
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Follow Up

After I posted this last note, I noticed that Strawboss had asked me to verify my qualifications.

Strawboss, go to cpmgroup's website. You will see a lot of material about us.

To your specific question: CPM Group's client list is confidential. Several companies allow us to use them as references, and we are seen in the market as experts. If you look at our annual Gold Silver or Platinum Group Metals Yearbooks you will see various companies as sponsors. Obviously, these are companies that use us. If you review the list of corporate sponsors of our annual Silver Reception and Specialty Metals Receptions at PDAC, you will see other major corporations.

Around 70% of world gold production, 85% of silver, and most of the platinum group metals comes from companies that take some level of research or consulting from us.

You probably would find the Yearbooks incredibly informative. Also, I wrote a book, Commodities Rising, in 2005, released in 2006. You probably would find that very interesting and insightful. It is a very chatty book, full of anecdotes, so you can learn a lot more about my background there, while also learning all sorts of things about commodities markets.

In the 1990s we had advertisements that used three references. One was Sir James Goldsmith, one of the best gold investors of all times, and one of the most amazing people I have had the pleasure to work with. Another was Stanley Druckenmiller, who was in charge of the Quantum Fund for Soros Investments at the time. The third was Mark Lettes, who ran the gold hedge book at Amax Gold. At the time the market was valuing gold at around $340. Mark's team was trading around the market and earning around $500 per ounce for the gold it sold from the mining operations. His performance speaks volumes. In fact, one anti-hedging advocate in a debate with me in London said that if every gold mining company could have a CFO or Treasurer like Mark Lettes, he would not be against hedging.

There are many others.

Read the books. That's the best way to get to know me.

Oh, there is another way. In the early 2000s GATA tried to get attention for itself by challenging the World Gold Council, GFMS, or Jessica Jacks/Cross to a debate. None of them would respond. One of the world's largest gold mining companeis said to GATA that it would finance and arrange a global, via the internet debate for GATA, but with me on the other side. GATA stopped making that challenge, until 2009. It made that challenge in 2009, and Bernard Lo of Bloomberg TV (at that time) said they would arrange it. GATA backed off. We dragged them to a debate at Jim Puplava's Financial Sense in May 2010, after they lied about my CFTC testimony. That debate is still available on the internet, as is the second one we dragged them into in October 2011 at the Silver Summit, also available on the internet. I thought their refusal to debate me was a compliment. So, too, was the fact that another ersatz competitor of ours used to refuse to be at the same conferences as us, much less on the same panel as us. So, too, it seems, Ted Butler's and Harvey Organ's unwillingness to engage in any debate with me. Scam artists don't like facts and figures, and sober analytics.

I hope that helps point you to ways to qualify me.

Again, good night.

 

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bronsuchecki
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2% cap

I remember that 2% cap claim be made, but can't remember where. Can someone provide the link to the source. Questions I have are over what time period was the analysis done and the exact claim.

In the meantime I had a look at % price moves from AM Fix to AM Fix the next day since Jan 1 2000. I picked the London Fix as I have the data to hand in a spreadsheet and could knock this up quickly.

Over that time period we have 3029 data points and the summary frequencies are:

Greater than -2% - 118
From -2% to 0% - 1337
From 0% to 2% - 1427
Greater than 2% - 147

Looks pretty balanced to me with a skew to the positive, which we should expect during a bull market. I have a chart but can't upload at this point. Anyway, need the source link so I can replicate the analysis.

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S Roche
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Mr Christian

Thank you.

I note that it was not particularly gracious but I accept it. I am sure we all await the umpire's verdict with interest.

SR

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bronsuchecki
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PSLV discount

Erik T. wrote:
Given the redeemability clause and the law of efficient arbitrage, I don't believe it's possible for PSLV to trade at anything more than a very, very small discount to NAV (equivalent to the cost of arbitrage).

You are correct, the ability for the big boys to redeem should mean not too much discount will occur. However I seem to remember PSLV had a different tax treatment and something about tax liabilities but can't find it. I think it was that redeemers don't have any tax liability (which is good for no discounted buyback prices) but that the tax liability is left with the remaining holders (not good), but not sure about that.

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S Roche
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2% Cap

@ Bron,

Good input, thanks. The 2% cap claim was made in this thread several times with the time frame being from 2000 as you have covered.

I have a spreadsheet for the AM & PM Fixings and I will run it later several ways to see whether we are dealing with statistics or damn statistics as I suspect...the SK Options work* (updated Jan 2012**) was based on Adrian Douglas article from August 2010 (based on Dimitri Speck's research...everyone covered?) was referenced on this site by Chris Martenson and is referred to as "The Overnight Trade"

http://www.peakprosperity.com/blog/gold-manipulated-thats-okay/72892 .

SR

http://www.skoptionstrading.com/updates/2010/8/27/proposing-an-overnight-gold-fund.html

** http://www.skoptionstrading.com/updates/2012/1/14/revisiting-our-proposal-for-an-overnight-gold-fund.html

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bronsuchecki
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GLD bars

Strawboss wrote:
Firstly - they are purported in a GLD vault, but, the bar they show belongs to another fund?  Who's vault were they really in?

They were in HSBC's vault, which happens to store metal for various clients and various ETFs. They just didn't check to make sure the pallet Pisani picks up the bar from was one with GLD bars, not ETF Securities bars.

Strawboss wrote:
Secondly, that bar that Pisani holds up and twirls around is 400 ounces - supposedly.  That seemed kind of light - a point that even Screwtape brings up.

No they aren't light, but nor are they impossible to lift. I can't get access to the video so can't give it a good look. However, that bar will probably resurface on another bar list at some point, hopefully GoldMoney's, and they check all their bars. What is interesting about Warren's bar list database is the movement of bars between clients. Anyway, I think your "twirl" argument is scraping the bottom of the barrel as proof the ETFs don't have the metal.

S Roche's picture
S Roche
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Comex Bars

Kyle Bass explains why they took delivery and at 1.35 gives an insight into how seriously some warehouses take the concept of segregation, which may have a bearing on the GLD bar discussion.

 (2.08 total)

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victorthecleaner
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Posts: 50
couple of comments

Hi,

I have various comments.

1) First a few links:

Kid Dynamite on Eric Sprott just buying the silver at spot without any problem:

http://kiddynamitesworld.com/paper-and-physical-silver-prices-are-not-de...

Warren James at Screwtape on the Sprott delivery:

http://screwtapefiles.blogspot.com.au/2011/08/erics-delivery.html

Kid Dynamite on Sprott scalping the PSLV premium:

http://kiddynamitesworld.com/sprott-physical-silver-trusts-premium-is-lo...

2) On the issue of 'manipulation'. Several people who sell financial products or newletters (Butler, Maguire, Embry, TF) have claimed that JP Morgan and HSBC were naked short silver at the COMEX, they would fear a rising silver price, and they would therefore manipulate the COMEX silver price down. That's utter nonsense, and I thought we had established this fact earlier during this thread (when we compared the size of the OTC market with the COMEX, highlighting that what they observe and call 'manipulation' is in fact probably arbitrage).

For me, the conclusion is that these people have zero credibility. Period.

If someone (Maguire) forms an 'army' of inexperienced retail investors in order to 'bring down the cartel', using just this very COMEX nonsense as the major advert, and then charges $500 per month for this 'service', this is quite obviously an investment scam of the very common sort.

Now if you read my previous postings, you should have noticed that I think that gold is a very political currency. Yes, I wrote that I think the gold-oil ratio was managed. But certainly not by some banks going naked short. The gold price is probably mainly managed by controlling the credit volume in the OTC market - just as increasing the money supply of the US$ creates some price inflation, increasing the amount of credit gold lowers the gold price relative to other assets. But, hey, the people I was complaining about, seem not even to know that there is an OTC market, and so how can you expect them to grasp such a subtle concept as credit creation in the OTC market for unallocated gold.

Finally, there is some very good statistical analysis in the book by Dimitri Speck (unfortunately only in German). Some charts are available with comments in English:

http://www.geheime-goldpolitik.de/english/

He knows his statistics, he does not tell you any nonsense, and yes, he has some evidence that the market is not trading freely.

3) Troy Ounce,

A low gold price means everything to CB; a high gold price means "mistrust" and the beginning of the end of the system. CB knows this very well

I am not sure you are getting the teams right. There are basically two bloks in the world. The dollar block consists of the U.S. and its very close allies (Britain, Japan, Australia, Canada). And the gold block which is basically the rest of the world (Euro countries, oil  countries ex Canada and Mexico, China, Russia).

If you take a look at the balance sheet of the Eurosystem (ECB plus national central banks), you see that they like a high gold price. In fact, should they ever have to defend the Euro (so far only some governments are in financial trouble which does not affect the currency), they will buy gold and sell Euros. This increases the gold backing of the Euro because of the additional gold, and it revalues the existing reserve upwards. If you think about how the Euro has been set up, it is engineered for a world in which the dollar is replaced by gold as the major international reserve.

The followers of the usual precious metals blogs and websites are in for a huge surprice when they realize how the world outside the U.S. works.

Sincerely,

Victor

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