Wynter Benton Report Card Semester 2

Ever since Wynter Benton came blazing back on the scene for a second round, a number of claims and statements have been made. Let's see how they check out (my grading).

This is an important post for me because it ends a train of hope I once had that the Wynter Benton Group might have been able to take on the forces of the mighty money machine. For the record I do believe that the group is a real group of traders, but I now believe that most of what they put out there is either misleading or dishonest and serves no real distinction beyond that of any message-board chatter.

For now, my mind is changed about Wynter Benton (and Robert LeRoy Parker was right about them). I am no longer their friend. I will not reference what they say in order to help time any trades, and we recommend that others don't. I still don't know what they hoped to achieve with their messages - other than to try and move markets in a direction favourable to themselves - but their latest round of messages dug themselves into quite a hole which damaged their credibility somewhat. Here are some of the points made since they reappeared on the scene, and my notes on each.

1. The JPM Derivatives Bomb date (the topic of the very first 'Benton returns' message) was originally set to go off at 60 days of silver above $36/oz, which on the charts starts somewhere around July 12th. The actual date was not specified and discussed at length by the guys at tfmetalsreport (forum), who determined that this must have been referring to calendar days (because it wasn't specified). wynter_benton then posted more recently on the 16th September to say that it was in fact trading days, which would extend the deadline for JPM to somewhere in early October. The bomb is supposed to manifest itself in the form of a significantly higher price of silver, and a significantly lower shareprice of JPM when they report their quarterly earnings (and in theory show losses in derivatives). wynter still expects JPM's shareprice to be as low as $20 sometime in October. The end of the world folk always have an issue when a date is specified and not reached. The share price of JPM would have to have some serious pummelling in the next couple of weeks for the story to have any credibility, however note that the current downdraft in the markets may be a desperate attempt to pull silver below that crucial $36/oz mark.


2. Without Stops? Wynter did warn that the morgue would become very desperate, and advised 'do not put stop losses on your futures positions'. Presumably this is to prevent the price movers from shaking out a bunch of stops and arrest the momentum of any sudden fall in the price. Fair enough, but this is dangerous advice for any monkey trying to play the 'skim the value from other players' game in the futures markets. Who does this benefit and can you really take their advice at face value?


3. A Sovereign Central Bank will apparently shortly announce they are accumulating Silver as a reserve asset [link]. Okay, that's fair enough but the idea is not new. In fact, I wrote a bit about this here and here (back when Amber was reading our board). While I still like the idea - until we see some kind of official headline/statement from an actual sovereign central bank, then the news is of no better quality than SGS saying that the central banks are awash with tungsten bars.


4. The 'Not enough physical Silver' meme gets repeated quite a few times in the new messages, along with the threat of them 'busting the Comex' if silver goes below $36/oz [link]. A year ago I would have believed this, but these days I am well aware that there is a lot of physical silver available, and that the market is not really as tight as it is made out to be (for example, take a look at the logistics of Eric's Delivery). wynter_benton also takes the line that taking physical off the market will hurt JPM [link]. As far as my research has taken me, the opposite is actually true - a tighter physical market gives more power (over price) to the people who have the most of it ** ... specifically the bullion banks and (yep) JPM themselves as the custodian of SLV. Just remember that the inventory of SLV was as high recently as 360 million ounces, whereas it is currently about 320 million ounces.

There is also the timing of the Greece default as called by Benton's sources, I won't discuss it but in order for the sources to be credible, the announcement about Greece's specific terms of default must be known by end of September. When the market has already priced in a default (reflected in the greek bond market) I find the Greece default news pretty unremarkable.

So I guess we just wait and see until the end of September unfold. I actually do hope my pessimism is misplaced, and Wynter delivers the goods but I'm no longer betting on it. Also, there IS a wildcard. The size of the silver market is still very small and could be cornered very easily by whoever had deep enough pockets. For example, the entire stock of SLV can be purchased for about 14 billion dollars. But therein lies the rub - this team is playing with less than that amount. And if that's the case, I wonder what makes them think they will win their battle with the FED.

Notes and links:

• Original Report Card Semester 1
• Discussion Forum at TFMetalsReport, which discusses the posts
• Yahoo Boards wynter_benton messages
• ** re: my claim that 'a tighter physical market gives more power to the manipulators', this is based on my research to date and is entirely debatable (pretty much a separate topic). My primary thoughts are that the bullion banks can make millions of ounces appear and reappear in the market at will and this is made all-the-easier if there are no large chunks of bullion not in their control.