More Questions (Explanation on my post by Warren)

My last post was a whirlwind - and only those who regularly follow a handful of blogs would have been able to make any sense of it. This is a reprint of the primary concepts for the benefit of Paul D. Bain - in the hope that he will add some forensics commentary himself.

.. About one week ago, the following message appeared on the Yahoo Boards. It caused a stir because the writer was claiming a 70% premium offer to not redeem physical silver. In true viral fashion, the URL was found in the comments of many blogs - including [ Harveys, SilverGoldSilver, and Along the Watchtower ]. And here at screwtape files, while the claim is outrageous, this is not news to us - our own mystery poster 'Amber' claimed an 80% premium was obtained in an attempt by their group. The blogosphere has been in a suitable amount of froth over the claims, with a user called 'Kid Dynamite' especially batting for the legitimacy of SLV and bashing PSLV.

Our goal here is to test the validity of claims made and perhaps unveil what is hidden from our sight. To this end - the claims are either fact or fiction (or an elaborate mix of half-truths). We want to identify whether we are being lied to, but to further uncover WHY they would post the claim (analyze motives and agenda). For me, the 70% premium claim story comes undone because for the last couple of years, the user 'doc366' appears to be using multiple accounts (at least 5) to spam news links into relevant stock forums on the Yahoo Finance Message Boards. Three of those accounts used have a 'conversation' together about a JPM comex default (using emotive, non-factual language), so it appears to be a largely amateur meme injection.

My primary argument is that if entities out there covertly promoting the end of Comex, then it serves to identify who 'they' are, and what their agenda is. My wider thesis is that the Comex will be used as a scapegoat to hide behind as gold becomes revalued, and to that end, the whole damn thing has been planned by someone - just a psyop to influence and prime public opinion so that when the next finance paradigm comes about, there is no rioting on the streets. It also occurs to me that someone (possibly JP Morgan themselves) is LONG physical bullion (as suggested by some) and that they may in fact be responsible for engineering some of today's misinformation.

But that explanation is simply my tin-foil-hat-variety (I see dead people). The better explanation is someone out to make a quick buck, as expounded by DarkMath's comment: My take is the guy whose making money using astroturf software to post fake posts on Yahoo also has a hankering for Silver. So he says to himself after he gets bitten by the Silver Bug: hey my day job is spamming Yahoo message boards why don't I kill two birds with one stone and use the software to promote the Comex will default story."

I hope this explains why my research raise more questions than is answered, and that it explains the context of my frenetic post a bit better.


Reference and NOTES:
1. All this hardly matters anyway - the window for obtaining cheap bullion is closing fast and I hope everyone who is reading this has a little bit on their person.

2. The new financial paradigm I'm talking about has been well described by for the last couple of years and I personally think we are now seeing this transition.

3. SilverGoldSilver claims in his Bears videos that the Comex default is just the next stage as part of a wider agenda. And yep, I suggest this fits what we are seeing (but I do think the endgame is Freegold, not a new Fiat currency).

4. My Own Garbled Posts (by Warren):


5. Primary Wynter Benton Stuff (by Louis Cypher):



Warren said...

I REALLY liked Eternal Student's comment on harvey's blog (especially the bit about the Silver Gnomes in the Bowels of the Comex, it deserves some graphics). I think this will be a great reference point next month as silver inexplicably hovers at $36/ounce:

Eternal Student said... "@Brian:

One can conjure up all the arguments that one likes, pro or con. To paraphrase a superb piece by Trader Dan once, it's all BS. The only thing that matters is the market. And the market is showing tight supply.

Go argue with the market place.

Myself, I'm going to go out on a limb here, and predict that the Comex doesn't default, even if they really don't have the silver.

Has Blythe's silver tongue been whispering secrets in my ear? Or perhaps some silver gnomes in the bowels of the Comex have been talking to me? Or perhaps the supernatural, awe inspiring magical powers of HAARP been made available to me?


I'm not an expert on PMs by any means. But I have seen some amazing things done in order to play the pretend and extend game. I expect that we'll see something unique and imaginative (and crooked) when the Comex does run out of silver.

DarkMath said...

Brian knows his stuff. (With the exception of his denial of the Andrew Maguire/JPMorgan story because for some reason he can't believe the Fed would ever bother to intervene in something other than the Bond market...DarkMath writes incredulously with full knowledge the Fed has Gold Swap agreements with Central Banks to intervene in the Gold market and since it owns no Silver it can enlists its representative on Wall Street-JPMorgan to use its position limit exemption to throw cold water on the price of Silver...but that's another story. )

The big picture is the Comex is headed for default eventually. From my calculations the Comex has about 40,000,000oz of available Silver to deliver. They're not going to default THIS month. But since the physical supply is drying up those 40,000,000oz need to last them a long time. They lost 10,000,000oz this month and I suspect they'll lose about that much for the next big delivery months. They'll also be getting in physical Silver from the few legitimate Hedges that JPMorgan does have (they have do have SOME). So we're not looking at 4 months (losing 10 million oz/month). You have to average in the incoming Silver from miners that was sold by JPMorgan X years ago. What's the answer?
I don't know but I would argue whatever number that is, is reflected in the declining slope of the Comex available Silver inventory:

By my eye they are losing about 10,000,000oz per year. And not this chart is the TOTAL inventory. They only have 40,000,000oz of DELIVERABLE Silver. So 10 Millionoz/Year * 4Years = 40,000,000oz in 4 years. So conservatively the Comex has 4 YEARS until a default.

BUT that is assuming static demand and demand for Silver is growing exponentially (I tell 2 friends about Silver and they tell 2 friends etc). So that 10,000,000oz loss per year will grow exponentially to 15,000,000 then 20,000,000 then 50,000,000. etc etc.
So we can't say the Comex will lose 10,000,000oz per year, it's more. Based on that I'd give them less than 4 years. I pick 2 years before they run out of deliverable Silver.
So sit back, buy a comfortable chair it's going to be a while. Nonetheless it's still going to be quite a show when it happens.
What I'm trying to figure out now is whether I go all in in Silver right now or keep my powder dry until 2013, in the mean time ride the Fed induced POMO stock bubble we are now enjoying.

sierra_hpbt said...

If they have the 40,000,000 mil ounces like you say why have they not made delivery yet to the longs? As Ted Butler says never in the history of the Comex has there still been 50% of those standing for delivery yet to receive their ounces this deep into the delivery month.
All the accounting in the comex is subject to scrutny. If I were the Comex I would delivered every ounce as quickly as possible to show people that they had the physical silver. To many so called experts take everything JPM, SLV, the comex etc. say as the gospel. I think there is way to much lying going on. Kid dude (dynamite) and this so called Brian guy are not to be trusted. Kid dud defends SLV. How can you take anything SLV says as truth when JPM is the custodian?

DarkMath said...


"If they have the 40,000,000 mil ounces like you say why have they not made delivery yet to the longs? "

Good question. My initial thoughts are Silver incurs a storage fee but can also yield you money if you lease it. Lease rates are relatively high right now, maybe more than the storage fee? So if I can make more money in March leasing it than paying for storage I would wait until the end of March to give you your Silver. I don't know, I've never kept Silver on the Comex. All I know is I would be very surprised if the Comex defaulted this month.

"Kid dude (dynamite) and this so called Brian guy are not to be trusted."

I hope you realize those guys are both long Silver in a big way. They're just trying to keep it real and there has been way too much hysteria among Silver bugs. I've learned a lot from Kid Dynamite. I believe he's correct in that SLV has all its Silver. I also highly doubt the WB story and any sort of premium being paid. Just read the Screwtape posts of the past few days. The WB story is Astroturfing par excellance. It's bull shit and you've been duped. Same with PSLV's premium. Sprott just registered to sell his PSLV shares to cash in on the premium:

Sprott is playing Silver Bugs like chumps as he steals a %20 from them. (I own physical and wouldn't touch an ETF with a ten foot pole). Why doesn't that piss you off?

Warren said...

Thank you for the discussion gents.

So the camps are truly polarised and it seems my interpretation of memetic warfare related to stock pumping is possibly closer than I imagined. Can I just clarify - the pinnacle of your argument rests on SLV having the physical bullion that it claims it does. If that pillar is proven false then most of the arguments fall down, including the dirt being thrown on Mr Eric Sprott. You can bet that our spotlight of scrutiny will fall upon this issue.

For the record, while the Wynter Benton Story has some dna strands of disinformation I don't think the jury has come in yet with a full verdict ... not from where I sit at least. But the story is certainly being eclipsed by the bigger questions.

I venture these are they:

1. Does SLV have the physical bullion it claims?
2. Is the apparently-coming default of the Comex a planned thing?
3. Will silver ever be unshackled in our lifetime (i.e. in order for us value investors to benefit)?
4. What is the true identify behind the stories from the premium claimers?
5. Is the silver market tight because of true scarcity or it just another manipulation?

p.s. Any comment from you, Amber? I know you're out there.
p.p.s. Paul D. Bain, still interested to hear from you.

paulbain said...

Warren wrote:
p.p.s. Paul D. Bain, still interested to hear from you.

March 22, 2011 7:01 PM

Uhm, Warren, the article above (and appended comments) is a great deal to comprehend, and I do not understand it even now. I am still working on it. Please be patient.

I would like to know whether others are finding this matter as abstruse as I do. H0ly sh1t!

Another factor: honestly, I think that whether the Wynter Benton or Amber stories are true is largely irrelevant to my concerns. For this reason, these stories do not compel me to research them or to try to determine their validity. To me, these stories are interesting, but, ultimately, just noise.

-- Paul D. Bain

Kid Dynamite said...

Warren - just one thought, and you can email me on my blog if you want to reply, as I won't be checking this thread:

you're absolutely right about the key question being SLV's silver.

Approach it from the other side: IF SLV actually has the silver that they claim to, as audited, as described in the prospectus, and opposite every unproven allegation out there on the internet, THEN all of the silver-bugs's theories fall apart in a hurry - CRUMBLING down.

Of course, that's precisely why the silver-bugs cling so loudly, proudly, and devoutly to the claim, without a shred of evidence, that SLV doesn't have their silver.

Warren said...

Thanks Kid Dynamite - agreed, with one caveat - there is one more theory which fits all the data, questions and observations : that "the revaluation of silver is planned, the comex stories are leaked and that some big party like JPM is massively long physical silver at the same time as restricting supply". i.e. that they do have the 300m+ oz as claimed and that the physical market is tight, as observed but it's all quite deliberate. As we have just witnessed with someone-getting-advance-notice of the CME margin hike, does it not follow that any plan to massively revalue silver is also shared among the people in the know, and that they will still scalp the market at the expense of joe average? It works for me. I think we've seen a river of BS flow in one direction here - the people in power will always be holding onto that power somehow.

I will contact you independently when I have my next lance ready - I am turning my forensics to the published serial number data from SLV, since that's the only available vector point we can scrutinize the SLV holdings. Be ready to have an answer for any anomalies found.