Screwtape Looks at Silver Vault Inventories

The last few weeks have been busy*, but I had the chance to look at some of the 'big silver deposit' story for SLV, which had no shortage of commentators. For those who don't know about my database project, we are in the process of building data structures for data mining on the ETF serial number data. Because I study the data, I'm entitled to add my comment to the 'sphere.

Normally I start an article with a premise ... expecting this, testing that ... but today I'll come out with it - I'm disenfranchised with the 'silver shortage' people because nearly everything I look at with the data points the other way. Don't get me wrong - we have only begun to scratch the surface of what is possible with debunking, debate and analysis, and 'time will prove all things', but increasingly the popularized silver stories (particularly of the 2010-2011 vintage) all appear as solid as warm pig swill.



Part of my research challenge is to bring the complex stories to an easily digestible level, here's a quick look at what we've been discussing internally (I apologize to my fellow Screwtape Files writers who have already seen this story). SLV has a new vault - in New York. This detail has been superbly written up by the folk at about.ag. We became interested in the many SLV vaults, here's a chart of that historical data:

Red and Blue lines indicate the most interesting event.

The keen observer will notice a very specific trend - the "JPM London A" vault has basically been emptied over most of 2012, and the inventory has been shifted to "Brinks London". Was it the same inventory? Glad you asked, yes it was - or at least 99.5% of it, which we were able to verify with a match on serial number, refiner and gross weight (matches were measured between 01-Feb-2012 and most recent).

Can this be independently verified? Yes it can. I'm not the only one processing the SLV bar lists - if you visit  about.ag/slv you'll see a text summary of the various vault movements (at a weekly level). There are a lot of '... to brinks London' statements - i.e. our graph is just the pictorial version of some of these observations.

During internal discussion the best theory we had for the movement is the possibility that Brinks is offering a competitive storage rate for their new vault (in order to utilize the new capacity), and that the deal probably includes a good rate for shipping - Brinks is (after all) a bullion transport company.¹

Regardless of the reasons behind it, the Brinks vault now holds a lot of metal, some of which used to be in JPM London A. Because we have a database, we can also easily extract more detail and look at metal shipped over time. The following graph shows the inventory which 'moves' across.

Movements to 'Brinks London'. Daily average seems to be ~800,000 oz.
Week of 25-July-2012 seems to be 'a perfect week' with even deliveries Mon-Fri.


We established through the data that all of the changes are between each bar list issue - what I mean by that is that in one list we see the bar marked as 'JPM London A' and in the following day it is marked 'Brinks London' (i.e. the bar is never 'missing'). In theory this simply means 'committed to Brinks' since one would have to assume that the re-vaulting process takes longer than a day? In any case, the deliveries are consistent, and if you look closely you'll be able to spot the 5-day working week for the times when we get a bar list produced every day. It is safe to suggest that there is a minimum batch size here - we see approximately 20 tonnes get moved at a time - the larger amounts are possibly a reflection of more than one truck/trip per day or simply a build-up for where we don't see a new bar list for a few days. The 20 tonne figure roughly represents the highest amount that can be insured in a single trip.

Quick quiz:

A bullion transport company (who have just built a really massive bullion vault), spent 10 months relocating nearly 100 million ounces of silver from another major vault, the movements of which is clearly visible in the data and is consistent in regards to practical batch movements. Identify the best response:

(a) The silver is not real - Brinks are actually the same lizard people who built the Denver airport facility and the vault is a new bunker that few have seen. The staggered "deliveries" are just part of the cunning and calculated deception.

(b) Brinks (like RCM) are also running a fractional paper scam. JPM needed to "relocate" the silver because they were being audited. Blythe has Brinks employees under mind control.

(c) Oh okay, that 100 Moz is probably real silver - but the rest isn't. Buy a silver oz, crash JP Morgan!

(d) Uh, seems like a legitimate movement of silver.

My primary concern though, has been trying to look for dark bullion, which is the subject of the next article I am (still) writing. We'll go into this more next, but just so you know what I'm talking about - the ViaMat inventory that gets closed out in mid-2011 --> doesn't seem to resurface again anywhere in the data. That is about 50 million ounces in round figures. The same happens for the 'Johnson Matthew UK. Royston' vault just recently - as observed at about.ag, these vaults do not re-enter SLV.

We don't know where that inventory goes² - that's the point of it being 'dark', we've got no data ... maybe it got sold to mints who melted them down for coins or maybe they are just in the hands of private investors. In any case, it's a lot of metal which needs to be factored into the narrative of 'silver shortages'. What I mean by this is that we've only just looked at two vaults and we can say that there's about (rought figures) 59 million ounces out there which we've seen once, but are no longer accounted for. Once we start the full tally, we'll see a lot more going missing. Where is it exactly? There's still several possibilities due to limit of reading error with the data (which I'll save for next post) but in the meantime anyone still peddling the 'shortage of silver' meme is not really looking at the core data.

------------
* With flooding and power outages, the standard for Brisbane these days it seems.
¹ We're still not generally satisfied on the 'reasons why'. Other possibilities for the vault movement may be related to insurance levels for vault inventories - apparently as the value of the metal has increased, the threshold and premiums for covering existing vaults is changing (just some comment I saw on the internet from some fund manager).
² The database currently holds data for 16 silver ETF's.NOTE: we don't currently process the data for ZKB fund because they don't publish the refiner codes.

53 comments:

Kelly Lambert said...

FYI, most silver buyers don't buy it because there's "none left," they buy it because it's real money.

Kid Dynamite said...

@Kelly - I believe that Warren is doing this work in response to the cacophony of DAILY nonsense all over the internet that is spewed by a variety of PM blogs who preach of a massive shortage of silver.

I'll leave the debate as to they "moneyness" of silver for another time.

duggo said...

I should imagine that Bix Weir, BrotherJohn, Max Keiser and the Silver Docs would all put "a" "b" and "c" as their answer.
Screwtape regulars would all go for "d". The reason for this is because we are all part of the Lizard conspiracy. I transform every night and twice on the weekends.

Excellent work.

Kid Dynamite said...

ohhh - it JUST occurred to me how the PM blogs will spin this:

"Other banksters are competing with The Morgue for the right to steal your silver from you, so this is just MORE evidence that the final nail is almost in JPM's coffin"...

victorthecleaner said...

I love this work.

One comment: Silver is used industrially. Even though every one of your bars has a serial number (because it might be in the vault forever), many bars aren't. They are melted down and end up in solar panels, medical solutions, or in consumer electronics. No surprise if some bars disappear for good.

One question: What's JPM going to do with the empty vault? Pallets with cans of cool aid?

I would understand it if they redeem SLV that's located in the JPM vault and create SLV that's located in the Brinks vault. Why not. Similar to a loco swap. Then JPM could sell the silver from the JPM vault to private investors who might pay a higher storage fee than SLV or whatever their plan is.

But now the vault is empty. What are they gonna do with it?

Put gold there????

Victor

S Roche said...

Copper?

http://www.reuters.com/article/2012/12/17/us-jpm-fund-copper-idUSBRE8BG0I820121217

Anyone seen Procheimian? He owes me a post.

Kid Dynamite said...

victor - just to clarify, Warren is not talking about "redeem SLV that's located in the JPM vault and create SLV that's located in the Brinks vault. "

he's talking about moving the silver from the JPM vault to the brinks vault. In a loco swap, you'd see different metal (ie, I swap my metal at JPM for your metal at Brinks).

victorthecleaner said...

Yes, Kid, this is why I wrote "I would understand...".

Copper, yes, that might be it. Does anyone think they get more storage fees for copper (per weight, per volume, per palette, whatever) than they get for silver? Probably not. But as the main market maker for the new ETF. they'll probably take their cut anyway.

Make sense. Brinks is in the LBMA vault system - they can easily take the silver. But copper is not an LBMA product, and so JPM needs to store the copper themselves.

Victor

Bullion Baron said...

JPM is moving real assets out of their own vaults in preparation for the Silver manipulation lawsuit which is likely to cripple the company. Game on!

Warren James said...

@Victor & S Roche, copper seems a decent guess for the use of the empty vault, certainly it's a lot of decent vaulting space now available ... Either way, we'll be keeping an eye on general vault inventory from now on since it has yielded these interesting observations (the volatile brinks vault is worth of study by itself).

@Victor you're correct that the incidence of silver bar serial numbers disappearing (for good) will be rather high because of the industrial uses. In our classification we're calling that 'lost bullion' and we also have a way to chart it. That aspect of the inventory (the 'flow') is also the Achilles heel of the 'silver is fake' idea set.

@Kelly, my primary point is the 'silver shortage' stories wasted a large amount of my time because I only find contrary data during my years of research. Silver does have some value to humanity, no question about it. As Kid Dynamite says above, what's on trial is the promotion surrounding it. The great silver shortage was a major community hype factor in the last few years. Just like finding termites in one section of a house, I'm now wondering how far the rot extends.

p.s. If anyone wants to independently verify the figures, the full SLV historical document archive (for 2012) is here. The vault inventories can be seen on page 1 of each document (however we've also calculated from the contents).

S Roche said...

BB wins! lol

"I'm now wondering how far the rot extends"... umm, about this far?

From Harvey Organ currently:

"Dave from Denver noted that in Shanghai a total of 31 tonnes of gold stood for delivery Thursday night. If you add the comex gold to Shanghai delivery gold we have 73 tonnes of gold standing which represents almost 40% of annual gold production. It seems to me that the physical markets are truly on fire!"

http://harveyorgan.blogspot.com.au/

It has been pointed out that maybe Harvey means 40% of the monthly gold production...even so, 2650 (say) by 12 by 40%...oh well, close enough for blog-work.

Kid Dynamite said...

Mr Roche, I have a proposition for you, unrelated to your comment about Harvey Organ:

premise: Harvey Organ clearly has major, factual, fundamental flaws in his understanding of the various markets for silver. There is no possible way that anyone who actually has any clue about how the COMEX or ETFs function can argue that Harvey Organ has ANY idea what he is talking about, despite the fact that he preaches in depth about each of those markets on a DAILY basis.

THEREFORE: any blog who references Harvey Organ also reveals themselves to be charlatans, quoting another charlatan...

discuss...

S Roche said...

Well, KD, really that sounds a bit harsh.

I think many commentators are just trying to make sense of the world as they see their part of it. I am constantly reminded of the Blind Men And The Elephant. There are the lost and confused; the trusting and the naive; the well-meaning but incompetent; the seekers-of-knowledge who find themselves in unusual alcoves-of-the-internet and repeat what they find (generally what Jim Sinclair unkindly called recently the halt and the lame)... and, OK, then there are some charlatans peddling rubbish.

I am not even sure that Harvey is as you say, but I am rather glad for mankind that he is no longer a pharmacist.

There are also those who are so shocked by so many of the events of the last five years that they have developed a febrile mind-set which overrides dispassionate reason.

I think there is a lot of fear in much of the West and a tendency to extremism. Even I feel circumstances are eerily similar to the early 20th Century.

Information is where you find it, for either JP Morgan or Joe Kennedy, or both, obtained one of their most valuable pieces of information from a shoeshine boy or an elevator operator.

ps Does my referencing Harvey Organ on STFU qualify as such a revelation as you state in your conclusion?

Kid Dynamite said...

@Roche -

sorry, I don't understand your question...

but I don't think I was harsh - what I meant was simply that to those who have any knowledge of the market, there can be no doubt whatsoever that Mr. Organ's view of the market is seriously flawed - gross factual errors of misunderstanding. Repeated on a daily basis.

but there are many who pass *themselves* off as precious metals experts who clearly cannot see that Mr. Organ is a fraud and cite his "opinions". Hence, they too can clearly be seen to be charlatans. I can name names, if you want, but then the hornets will come after me, and you should probably know who they are anyway.

by the way - are you sure he's no longer a pharmacist? I thought that was his day job... I'll try not to hijack this thread, but my opinion is that this is one reason why the Ted Butlers of the world get ignored by the very people they are screaming to for action: the regulators take a look at Ted's missives, filled with gross inaccuracies (ie: SLV short interest represents shares unbacked by silver - missing silver) - and they says "jeezus - we are not going to waste our time with this idiot")
-KD

S Roche said...

@KD, I think you are correct and it is unfortunate.

Remember though, the words attributed to Kissinger: "even a paranoid (sic) has some real enemies", meaning that just because some of those on the manipulation bandwagon lack credibility, that does not support the case that the markets are free and fair.

In structuring my case for manipulation occurring I like to start with the Washington Agreement On Gold and proceed from there.

http://en.wikipedia.org/wiki/Washington_Agreement_on_Gold

duggo said...

Just to inject a thought from a "amateur".

A "manipulation" never lasts a long time. People that are into "corruption" are by natural short-term players.

Silver "manipulation" seems to have been going on too long to be "manipulation" but rather market of spivs and hustlers doing their normal thing.

When you see silver disappearing from flea markets and house sales and you see shops offering to buy your silver THEN i'll believe there is a shortage.

Warren James said...

@duggo, yep. I suppose it requires a good definition of fraud as well...

'manipulation' always seems to suggest a manufactured deviation from the norm, but these days it seems to me the norm is now inclusive of manufactured deviations.

FWIW, I have put some thought into 'cash for gold' - many of the shops will give far less than spot price for the gold. Standard consumer (who doesn't know about the bull market) simply thinks 'hey that is double what I paid for it', so it's kind of an arbitrage trade on people's naivety.

victorthecleaner said...

S Roche,

if you start with the WAG, you'll probably want to drop by here (don't know whether you have seen it):

http://www.bundesbank.de/Redaktion/DE/Downloads/Bundesbank/Wissenswert/gold_entwicklung.pdf?__blob=publicationFile

and

http://www.bundesbank.de/Redaktion/DE/Downloads/Bundesbank/Wissenswert/gold_transaktionen.pdf?__blob=publicationFile

Note the time period of swaps, sight accounts (BIS unallocated), leasing and the withdrawal of physical from London in the early 2000s.

I suggested the interpretation "We are all physical now, how about you?"

Victor

S Roche said...

Interesting that the amount in London increased by a smaller but significant amount after 2007...

Thank you for both those links.

Along the lines of "We are all physical now" it is interesting that UBS and Credit Suisse are pushing holders of unallocated gold accounts into allocated:

http://www.bloomberg.com/news/2013-01-30/credit-suisse-says-adjusting-precious-metals-account-charges.html

The Grauniad suggests it is to comply with Basel III (but it is a silly article otherwise so I am not linking it) and Julian Phillips thinks it is US Tax related, prior to confiscation:

http://www.safehaven.com/article/28672/whats-behind-moving-swiss-bank-clients-from-unallocated-to-allocated-gold-accounts?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+safehaven%2Fall-articles+(Safehaven+-+Most+Recent+Articles)

I don't know about the reasons cited, but as to the effect, if we see a major rise in the PoG soon I will look back to this event as initiating the public run from unallocated to allocated.

victorthecleaner said...


The Bundesbank closed the leasing (just over 100 tonnes) around 2007. About a third of this gold popped up on London and the remainder in unallocated BIS accounts which have by now been allocated.

I am not sure I fully understand what exactly the Swiss banks are doing now. Are they charging storage fees on unallocated accounts, making them as expensive as fully allocated? I am not 100% sure this is what they are doing. If yes, you might think somebody told them to wind down their unallocated operations.

Anyone knows what Deutsche Bank is doing?

Victor

victorthecleaner said...


Btw, FOFOA observed the lack of increase in the Euro price of gold towards the end of the year

http://fofoa.blogspot.com/2013/01/happy-new-year.html

and speculated that paper gold support might have ended.

If he is right, the price will eventually drop until the market breaks.

Victor

milamber said...

Subbing comments

77 said...

comex silver stocks blasted yest. to highest level since 1997...old trader axiom is high stocks means players have no use for the metal..

china closing for a week on saturday is that affecting copper...crude oil the ruler of our CCI roost bouncing off 20-day MA this minute..gold and silver continue to hold their 20's
http://stockcharts.com/freecharts/candleglance.html?gld,uso,tlt,fxe,WEAT,JJC,CORN,SOYB,$SOYB,$CORN,$WHEAT,slv|B|H14,3

big usda report friday expecting bullish soybeans, bearish both corn and wheat...

cheers!

SugarLover said...
This comment has been removed by a blog administrator.
SugarLover said...

Long live free speech!!

(As long as it fits the prescribed fluffy-bunny, love-in, meme where trumpeting is fine, but truth is deleted).


You're just like the silver bugs really.

Warren James said...

@SugarLover, what you wrote about FOFOA was nasty, so I quarantined it. You shouldn’t be surprised as I have already stated in the past I would. Here it is again, so that we can be clear:

"For the record, time may also reveal me automatically removing any disparaging ad hominem references to other blog authors.

Here at this blog, we try very hard to encourage:

1) Analysis of past predictive models
2) Data
3) Debate
"

Whether we succeed at this is irrelevant, but there is a dress code.

S Roche said...

OT but interesting re manipulation...

http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2012-gold.pdf

See Note 3. The Plunge Protection Team has gold reserves...why? Tradition no doubt.

SugarLover said...

Warren, thanks for your comment.

You do readers a disservice I believe, as you allow Vtc to trumpet Fofoa's baseless speculations, whilst deleting comments like mine that point out Fofoa's very poor predictive track-record.

You can have the true picture, or you can have a one-sided picture, your blog, your choice. I just point out facts, and facts are just facts, the truth can never be disparaging.

Regards.

duggo said...

I'm intrigued SugarLover and Warren.

I do like a bit of controversy. What are these facts?

I find FOFOA plausible and interesting. In fact I'm convinced about Gold but I find the comments section full of a cultish mentality. Woe betide if you question the "master" his fanatical acolytes will declare a fatwa.

victorthecleaner said...

S Roche,

yes, the ESF has gold. With the gold reserve act of 1934, all gold in the U.S. banking system was transferred to the government, i.e. to the Treasury.

In the U.S., it is not the central bank (Fed) who is in charge or reserves and exchange rate policy, but rather the Treasury Department. The ESF was established for this purpose. No secret.

This is in contrast to the Euro zone where no government can engage in reserve or foreign exchange transactions without ECB approval.

Since it is a plausible guess that the next financial crises will be currency crises, we will all see how relevant this difference is.

Victor
PS: BoE, BoJ don't have reserve sovereignty either.

S Roche said...

Thanks Victor,

I note the use of Gold Certificates here http://research.stlouisfed.org/fred2/series/WGCAL
and am surprised at the trading in Gold Certificates that is conducted by the individual Federal Reserve banks, here http://research.stlouisfed.org/fred2/tags/series/?t=certificate+account%3Bgold

Any thoughts?

btw, nice bounce in Euro Gold this week

Slow Loris Larry said...

@ SugarLover

If you politely rephrase your views on FOROA, I am sure that Warren will allow them.

The 'truth' does not need to be expressed with invective and/or disparaging statements.

Your use of 'nasty' and derisive language says far more about you than it does about your target.

Jeanne d'Arc said...

If the Screwtape policy was to remove all pejorative references to other blog hosts, then the logicial conclusion would be that 75% of my articles and comments would be removed also.

Freegold/FOFOA is, I am afraid, neither more nor less of a cult than the silverogosphere. Mr Sugarwotsit is correct in that. The Screwtape Files has always held all ideas to account, and why the cult-like FOFOA should have a clear pass is not clear to me.

I note that FOFOA refused when offered the chance to debate Freegold with a credible cynic (i.e. me). Rather, he preferred to rap himself in the warm cotton wool of his line-toeing admirers. How is that so different from Brother John F.?

The day that Screwtapes begins to censor opposing views is the day that the last bastion of free speech in the silverogosphere dies. Sorry if that sounds dramatic. But it's true.

victorthecleaner said...

S Roche,

quite some arcane practice, isn't it? What you are seeing is the U.S. equivalent of the European TARGET2 accounts.

The Federal Reserve system consists of a number of regional Federal Reserve banks, each of which is the central bank for all commercial banks in its district. (Of course, as of today, the FRBNY is the biggest one, but some 50 years ago, it was a lot smaller in relation to the others).

When CB reserves (i.e. "central bank money") is transferred between commercial banks in different districts, this reserve moves from the Fed of one district to the Fed of another district. Now one of the Federal Reserve banks has a reserve claim against another. (Just as TARGET2 in the Eurosystem - this is the balance of payments accounting between the different districts).

In the Federal Reserve system, these cross-district reserve balances are still cleared in gold certificates at the official price of $42.22/oz. It's some arcane legal provision somewhere in their charter - don't know all the details.

Isn't that cool?

(Btw the Eurosystem does not settle their TARGET2 balances, but rather leaves them open - anyone thinking they might eventually get settled in gold, too? When an at what price ;-)

I vaguely remember that the cross-district balances of the Fed system exceeded the notional value (at $42.22/oz) of their overall gold reserve during the financial crisis (when all Federal reserve banks bailed out a few institutions in New York which amounted to a huge transfer of reserves) and that they had been suspended for a while.

Another nice example that the US-dollar is a failed gold currency and still in limbo.

Victor

victorthecleaner said...


It's a tradition.

Victor

victorthecleaner said...


Gold doesn't play any role in the financial system. Nothing to see here. Move on, Jd'A.

Victor

S Roche said...

Thanks Victor, very generous of you to provide that summary. What a pity that Ron Paul did not have a few more zingers based on all this when he went up against Bernanke.

In limbo, huh? Aug 15, 1971 you no doubt recall that Nixon said that the suspension of gold convertibility he announced then was temporary...

Jeanne d'Arc said...

@VtC: your comment is irrelevant. As well you know, I am asking for the same standards to be applied to Freegold as you do to the silverbugs. What you, I or anyone else thinks of gold has no relevance to that.

JdA

victorthecleaner said...


Oh yes, in limbo, very much so. According to international law still in effect today, the U.S. owes the ROW (=rest of the world) gold at $42.22/oz for any dollar claim presented to the US Treasury. With some $8000bn dollars held abroad, that's well beyond 5 million metric tons.

Paying out this gold has been suspended, and the ROW has tacitly continued to clear US$ balances, but this is more like a cease fire than a peace treaty.

But what the U.S. cannot legally do is use their 8000 tonnes of gold (that the Treasury has locked away in "deep storage") in order to back the dollar at any price other than $42.22/oz - unless they get an international agreement first.

As far as I understand FOA, the best option they have is to sell the gold back to their citizens and then allow their citizens to to trade it internationally. This is why (FO)FOA think that gold confiscation is not going to happen. If the U.S. wanted to sell the gold internationally, they would "stare into a wall of dollars" (FOA).

Just as they did in 1978, the last time the tried to auction off some gold in order to support the dollar. There was the rumour that the Bundesbank has presented them with an ultimatum, threatening to buy all the gold they would sell and then some. This happened just before the Belgrade IMF meeting at which the Europeans had dictated Volcker how to fix the U.S. currency crisis, apparently threatening to dump their dollar reserves and to swap a part of their gold reserves to further countries in order to be able to return to gold settlement for all non-US international trade.

Btw, Jd'A, if you have some valid criticism of FOFOA, why don't you explain your specific argument (rather than calling FOFOA a 'cult' without substantiating - I thought you didn't want any shallow name-calling but rather some real meat added - so why don't you lead by example).

Victor

victorthecleaner said...


Once more. In legal terms, every dollar held outside the U.S. is a claim on the official U.S. gold reserve at $42.22/oz. Still in effect today.

This is another reason why (FO)FOA think that the present US dollar will be impossible to fix and that the U.S. will eventually have to start over with a new currency. As long as the present dollar is around (and held by foreigners in huge quantities), the U.S. gold reserve is a dead asset simply because it cannot be used in the present dollar system.

Victor

S Roche said...

@Victor,

I don't have evidence but I hope to live long enough to find out whether Bob Rubin and Larry Summers looked at that ol' dead asset and decided to bring it to life in the 1990s.

Jeanne d'Arc said...

@VtC: you're talking about two different subjects.

What I have raised is that the suppression of a comment, which goes no further than suggesting that someone is, 'not the brightest spark', given the previous heavy criticism of many silverbug sites by Screwtape, is disingenuous at best and against all principles of this site at worst.

You have, I hope you would agree, been allowed to say whatever you like here. And you've also gone further than suggesting someone is not a bright spark. So please do step up to support the right of all commentators to give their views regardless of whether or not they agree with you.

The other subject, which you've introduced rather randomly, is the truth or otherwise of Freegold. That is worthy of debate. Sadly, there is no longer a site where such a debate is allowed to be held.

On the 'cult' question: I seem to remember you falling foul of the FOFOA cult mentality during your little spat with him a while ago. I see that you've been successfully been brought back into the pen.

Warren James said...

uh, guys ... my (carefully chosen) qualifier was 'ad hominem'.

http://en.wikipedia.org/wiki/Ad_hominem

If SugarLover can give a direct quote (in context) about his interpretation about FOFOA's earlier views on the EURO then I will acquiesce. Until that time, my own reading and understanding shows that his statement was a deliberate misrepresentation/falsehood lacking evidence and civility.

fwiw, I have no idea why the comments section of our site always becomes an axe-grinding battleground for the relative merits of freegold theory - my article was about the Brinks vault full of silver. This situation, vexes me :(

victorthecleaner said...

S Roche,

this question did come up right after the Euro had been introduced and the Europeans had published the WAG.

This was the occasion at which Greenspan said (from memory, probably early 2000) "We should hold on to our gold and not sell it. In an emergency, gold is always accepted. Even during the war, Nazi Germany was able to purchase supplies for gold. In extremis, fiat money is not accepted."

Both Greenspan and Summers publicly said that the U.S. had no intention to sell or swap or lease or otherwise use their gold financially. With hindsight, this isn't that big a surprise.

When it comes to monetary policy, I claim that careful listening to the official announcements is seriously underrated.

Greenspan, Summers said they wouldn't use the gold. Summers wrote (Financial Times, spring 2011, from memory) "No country can be expected to run a persistent trade surplus just in order to service their foreign debt in real terms". Greenspan said (summer 2011 after the downgrade, from memory) "This is not an issue of credit risk. The United States can pay back any debt it owes because we can always print money."

The Europeans admitted that they had been leasing gold during the 1990s, and in 1999 they announced no expansion of the leasing programme, no further derivatives.

Draghi said the ECB was not the lender of last resort to governments (fall 2011). Later: "A lot of governments have yet to realise that they lost their national sovereignty a long time ago. Because, in the past, they have allowed their debt to pile up, they now need the goodwill of the financial markets." Noyer (Banque de France, BIS) pretty directly promised the Asians that they would hold the Euro at fixed purchasing power up to the 2% inflation target, more or less explicitly saying that (dollar) debt would no longer be a reliable store of value in the future, but Euro central bank money, not debt, would play this role.

Combine all this, and you can make a lot of "money", no? You just need to listen to the original reference, ignore the press, and then think about it.

Victor

SugarLover said...

Good evening.

Firstly, I don't believe my comment was ad hominem.

Here is a quote of Fofoa's from October 19th 2008 which discussed currencies and Opec. In it Fofoa drew the following conclusion about the Euro....

'because the Euro has squandered it's initial promise over the
past decade in favor of the dollar faction, it was easy for Paulson to
get the European central banks to cooperate which provided cover
for his very self centered actions.'

How did he reach that conclusion?


The post is worth reading for evidence of plenty of weird and wonderful lateral thinking on world events, such as....

'The battle lines have been drawn. Talk of a new currency is "in the
air". Who will print the new reserve currency? As Another taught us,
it is the currency that prices oil that IS the reserve currency of the
world.'

Who indeed?

Interestingly, I posted the first quote at Fofoa's blog a little while ago by way of warning to newcomers who may be easily duped into believing some of the predictions made over there, and guess what...Fofoa deleted it without comment. I thought that was hilarious, censoring one's own comments because you know it provides evidence of a lack of...brightness.

This was a man who had supposedly read the Another/FOA archives two or three times, and yet he didn't even 'get' the most basic of facts about the strength and design of the Euro.

Please feel free to read the rest of that post, it concludes with a comment about an Opec meeting being held that week (yawn)...

'The world should pay close attention to the press conference after
the OPEC meeting on Friday. My guess is that there is about a 25%
probability that it will be VERY important.'

Fofoa was expecting the announcement of a new currency system yadiyada etc.

So, when I saw VtC mention Fofoa's recent annual prediction of impending systemic changes (yes, every year, he's as regular as clockwork), I just felt I wanted to share another of his many less-than-bright comments, and there have been so many over the years.

I apologise to Warren for diverting the discussion from the post's sunject matter, but it is a complement to this blog that so many read here, and feel able to comment freely about gold/silver issues. The truth is important.

To make amends for causing a furore I will shortly have a small literary gift which I will freely offer to the blog (if interested) for posting. Not my own work I hasten to add, but the translation of some very interesting writings from an insider from yesteryear. I haven't seen the translation yet, but expect them to be fascinating, we shall see.

Keep up the good work here, all of you, and Jeannewotsit, good for you for championing continued free speech. And let's all watch the price of paper gold break to new highs this year, disproving Fofoa's latest speculations.

Warren James said...

@SugarLover, I stand (absolutely) corrected. Please accept my apologies.

We love insider information and would be happy to consider anything you have for publishing (actually we have an entire series of articles dedicated to something similar). Grateful you're willing to share the scoop factor as we realize you could just as easily create your own blog.

note to all: I may not comment on this thread and associated topics any longer as I am a little embarrassed, but also busy preparing my next post on dark bullion visualization (and renovating a house). Regards, Warren

/SleepingVillage/ said...


JdA,

You said...

"note that FOFOA refused when offered the chance to debate Freegold with a credible cynic (i.e. me). Rather, he preferred to rap himself in the warm cotton wool of his line-toeing admirers."

Hah! You must really think highly of yourself, but I'm afraid your offer was likely refused because it was lacking substance. Sorry to break it to ya.

If you were able to form a solid argument against FG, I honestly think a lot of people would like to see it. So do it! Go girl.

Just make sure you bring a little more to the table than Gary/SMRI/Sugartits/(insert newest version here).

And whatever you do, don't get anything wrong! You have to be perfect! %100! Sugartits is watching.

Warren James said...

In the interest of 'freedom of speech', and the recent repentance of my comment-deleting sins, I will do no moderation such as the comment above, despite the obvious intent (and strategy).

Have at it, folks, I will not interfere. :(

SugarLover said...

Warren, no sweat, consider it water under the bridge.

I'll give you a shout when I have received the translation, but it isn't 'insider info', rather the translated writings of someone who was about as deep on the inside as it was possible to be back in the day.

Jeanne d'Arc said...

Actually, Warren, I'm sorry too. I know you're just trying to keep the site civil and prevent known users of multiple identities (such as sugerthingamajig) from manipulating comment threads, and those are both noble causes that I should support.

So my comment above was very unhelpful of me. Sorry, mate.

I think I'll blame it on lack of sleep, low blood sugar, and a bit too long spent living in a war zone...

Biosci said...

Oh Victor, you can't leave us hanging like that.

"Since it is a plausible guess that the next financial crises will be currency crises, we will all see how relevant this difference is."

Please elaborate! (I confess I haven't taken--and won't take--the time to sift through thousands of pages of FOFOA.)

victorthecleaner said...


It's all smoke and mirrors, isn't it?

People tell you that the U.S. (and UK, Japan) are trying to artificially lower their currencies in order to be more competitive internationally.

Have you ever considered that the opposite might be the case? Firstly, lowering your exchange rate doesn't make you competitive. Just compare the UK with Germany during the period from WW2 and the year 2000. Nicely refuted empirically, no?

Secondly, is the dollar artificially low or artificially high? Think about the fixing of the dollar oil price by Saudi Arabia (adjustment of production) and the US (eliminating competing producers). Does the rising dollar oil price create supply of dollars or demand for dollars internationally?

Well, the dollar oil price has been rising, but there is something that has remained constant for 60 years: the gold/oil ratio. It's a win-win arrangement for SA+US as long as it lasts, isn't it?

One day, this arrangement will end (either because gold rises faster than oil, or because at some point you won't get gold for dollars any longer). Then everyone (=US,UK) will have a problem whose structural trade deficit suddenly becomes unbalanced when the capital inflow from the resource exporters stops.

Victor

Malcolm McIntyre said...

@duggo feb 5 8.26 if you consider manipulation blessed by longevity to be not real manipulation, no doubt you will be thrilled with the concept of the stationary bandit - who will then protect you against the roving bandit :) although Thorsten Polleit does not draw out that point in this address which is worth a look - http://vimeo.com/54422168

Best of luck - all us punters will need some.

Malcolm McIntyre