Vainly Willing the Return of the 2011 Silver Bubble

Do you remember February to May 2011?

I do. I'd previously confined my trading to stocks: oil and resources, mostly. But I wanted to branch out and thought the gold and silver charts looked good for a solid bounce back. My thesis for gold was pretty clear: a nice solid investment to hedge the rest of my portfolio against inflation. And I figured I'd take a slight gamble with silver as I imagined it would provide me with a 'volatile version' of gold. So at the beginning of February 2011 I went in at 75% gold, and 25% silver.

Boy, did us newbie silver investors get lucky! The charts had pointed to a good rise in silver, but we hadn't imagined such a move in our wildest dreams. By the end of the month it had gone from $26 to $34, and I was scaling out of gold and in to silver. With this metal swap, the profits just kept rising. By the end of April, it had all gone stupid, and it was obvious to anyone with two neurons to rub together that we were in the grip of a mania. I got out at around $45 and never regretted the decision. A few days later silver started its plunge from $50 to (eventually) $26, and has barely recovered to this day (currently at $31 and change).

What I did regret, however, was what happened to everyone who had not ejected. It could easily have been me too, had I had a bit less trading experience and a bit less fear (yes, sharp moves higher always scare the absolute bejesus out of me, more so than the plunges - fact). And this burned my curiosity. What had actually taken place? How had such a mania developed? And why didn't most retail silver investors get out? They were still buying all the way up to $49, the poor bastards.

So I started to look more deeply into the 2011 Silver Bubble, and events since, and was rather shocked by what I found.

The Bear Necessities (of Silver Life) updated

[Updates - some content was removed from this article following a complaint from Mr Dalal. Following further discussion and investigation, this content has been largely restored, save for a few minor edits. However, a note has been added at the end setting out Mr Dalal's principal objections to the article. In addition, some comments have been removed from this thread due to reasonable user privacy concerns.]

[Update 16 Oct 2012 - Further research, not published in order to protect sources, has revealed that 'SGS' was initially a collaborative effort, with Mr Dalal being one element only, albeit one with a financial and ideological stake in the enterprise. The author that we currently know as 'SGS' is not Mr Dalal, but another individual, C**** B********. Interestingly, the self-proclaimed backstory of C**** B******** is almost word-for-word identical to the self-proclaimed backstory of Wynter Benton. The irony of SGS's criticisms of WB are not lost on us.]

Many who learned about the ‘JPM cartel silver manipulation’ story did so through two animated bears, which have so far featured in seven XtraNormal videos made popular through Zero Hedge and YouTube. More perhaps than any other medium, these bears convinced investors in their droves of a conspiracy and, of course, their need to rush out and buy physical silver from the silver dealer advertised in the videos. These bears have made the silvergoldsilver blogspot one of the go-to sites for information about the silver market, and its irascible host holds court daily to dispense his expert trading advice (he claims to have conducted hundreds of thousands of trades, and hints strongly that he is a former professional trader). But what is the real story behind the site, the host, and the talking bears?

SILVERGOLDSILVER.COM

The site www.silvergoldsilver.com was registered on 5 May 2010 to an IP address in Dallas, TX, and was effectively an on-line clearing house for precious metals, promoted by a sister site, a Google Blogspot. The website sold what you would expect, and the Blogspot (first post 8 June 2010) carried a few articles and videos posted from elsewhere, including from the notorious penny stock pumpers, the National Inflation Association (NIA), which were warmly described as ‘friends’ of the Blogspot. Web traffic to the online store, as you can see here, was pretty poor until 3 December 2010, when we see a huge spike. This was the date that Bears 1 was released simultaneously on the Blogspot, Zero Hedge and YouTube.
Interestingly, the Bears video took just a few hours to be picked up by ZH, i.e. ZH had the story ready to run almost the minute it was published. Why was there apparently a pre-arrangement to publish between (the previously entirely unknown) silvergoldsilver Blogspot and the very well-known Zero Hedge? And why was such an arrangement not divulged and explained to the readers of either site? We can note further that ZH was keen to follow up the story, announcing a few days later that silvergoldsilver.com had run out of stock! Now there may be an entirely innocent motivation for this, but it is mysterious that an independent ‘news’ site like ZH was effectively running stories that benefited a private small business, especially given the apparent pre-collaboration on publication.
Bears 2 came out on 24 December, in similar circumstances, and both videos were viral hits. Legions of small investors were thus ‘educated’ about the alleged JPM conspiracy and the need to buy physical silver (ideally from SGS’s online coin shop). They were so successful, in fact, that the shop sold all its wares. The website shut down soon after, never to return (the rights to the domain name have not been renewed). Its Facebook page and Twitter feed also disappeared.

The sister Blogspot posted nothing again until 20 January, when the bears were dragged out again to explain away the post-Christmas silver price correction and soothe the nerves of those who’d run out to buy silver after Bears 1 and 2. Three more Bears videos followed, which still promoted the Blogspot even though the silvergoldsilver.com online store had already closed down. This raises two questions: first, why, if selling metal was so successful, did the store shut down? Second, why did the Blogspot keep releasing bears videos once their ostensible original purpose (advertising) no longer applied? Were the original producer(s) of the video and the original SGS franchise entirely on the same page at this point? Did SGS even make the bears videos? We might also note that although the Blogspot was clumsily designed and (during that time) only sporadically posted to, with no original content from the host, the Bears videos were smart, funny and compelling – they had been well put together to go viral.

From 30 January, for the first time, a series of posts began which remains unbroken to date. The site host now started to comment actively on what he posted, and to engage with commentators, and sought to add his own research and opinions to the site, which naturally jibed with the spirit of the Bears videos. This is, you will note, remarkably different to what came before. The site also received a makeover to give it a more ‘professional’ look. What did not change for some time, however, was a persistence in posting information sourced from the NIA (such as this example). This stopped only recently, in May, when the site host was called out on it by a commenter: the original post was rapidly updated and the site host claimed to have only been publishing the information for ‘short term’ trades. He then removed many of his own NIA-related posts from the archive. That’s quite a sudden reversal in position by anyone’s standards, considering that a six-month-long apparent endorsement of their activities was turned around in just three days.

It is, however, a rather typical action of the site, as it frequently removes posts that are later debunked (as was the case in June, when the nonsensical EU Times story was presented as fact on the SGS Blogspot: it vanished soon after), presumably to give the impression that SGS is ‘never wrong’. He also frequently removes the posts of commenters who challenge what is written on the site, no matter how politely or intelligently. This, of course, is his right as the owner of the blog. However, when this happens, this gives us the equal right to consider his motivations for doing so.


WHO IS SGS?

The ‘original’ SGS appears to be Albert Dalal from London, Ontario, who registered the online shop’s website. In addition to the formal web registration, he claims it as his own website (i.e. not that of, say, a client) on his publically available Linked In page. It is also registered to a residential address in London, ON. Anecdotally, I am told that much PM-related material has disappeared from Dalal's Facebook and Twitter accounts since the closure of silvergoldsilver.com, but he tweeted an article about silver coins from his Twitter account earlier this year and an article about US debt a few days ago. Mr Dalal has no professional trading qualifications, nor has he ever worked in this field as far as I can establish. Between leaving university in 1997 and the setting up of the SGS online shop in May 2010, he passed his time working in media companies in London Ontario.

Viz., Mr Dalal is the founder of Think Media (a London, ON, web marketing company), Penta Brand Media (another London, ON, media company, which never traded) and Kilshe.com, a shell site for a supposed oil and gas broker. He also attempted to set up a media business with five other associates, called Media All Stars, and had a stint selling lip gloss online for an associate’s small business.

Silvergoldsilver.com is registered to a residential address in London, ON, and Kilshe is registered to Think Media. Think Media itself is registered anonymously, but to a different residential address in London, ON. The telephone number for all three businesses is the same, but there is no office or other recognisable business premises. I have not found any Canadian company numbers registered for their names, no online endorsements from clients, and no record of any tax details or official accounts as required under Canadian law. For Think Media, there are claims to have run projects for BMW and Blackberry, but no details whatsoever are provided, and the site in general is remarkably sketchy on detail, considering it is presumably there to drum up customers. I have found no endorsements of Think Media’s work elsewhere on the web, nor have I found any reference to any business using its services. Penta Brand Media doesn’t even have a website (strange for a media company); however, a former employee and current associate of Dalal reveals that, ‘Due to some unfortunate events, Penta BM had to close their doors, and I was soon back in the freelance game again.’ Likewise, Media All Stars never seemed to get off the ground.

For Kilshe, the site is even more skeletal, and again there is no reference to its activities elsewhere on the web – clearly it doesn’t get much business either. That said, there are a couple of references to an Albert Dalal on several petroleum products B2B sites (here, here and here). These were all posted on 2 November 2009, and pre-date the creation of the Kilshe website in 2010, but do not appear to have been followed up since then. So it appears that Mr Dalal at least tried to put a toe in the waters of the oil brokerage business for at least a day, before thinking better of it and moving on to create silvergoldsilver.com.

It is interesting to compare the writing style and investment interests of the SGS Blogspot host with one CEESOLUTIONS, a long time poster on the Stockhouse website. Again, we cannot say for sure that both are the same individual, but it is noteworthy that when CEESOLUTIONS was recently challenged about his identity, after he had promoted the SGS website on Stockhouse on 26 April, he replied on 27 April ‘You got me. I’m SGS, roflmao’ (compare that phrase with this; note, however, that SGS denied the link on his own blog, after being challenged by a commentator on the issue). CEESOLUTIONS has also developed a deep interest in Tinka Resources of late, which is a stock that has been mercilessly promoted by SGS on his blog since 27 February. Nothing wrong, of course, in people using several aliases on the web, if that is what has happened, but using several identities to mutually reinforce their views, and give the impression that the support base for a particular proposition is larger than it otherwise would be, is more problematic. Not least when the subject in question is a piece of heavily pushed (albeit free and disclaimered) investment advice about a penny stock such as Tinka resources.

And just a few days ago, Bears 7 was released. More perhaps than even the first six, this video shows clear signs of not having been produced by SGS. Surprisingly, there’s been no mention of it in the last two weeks, which we might expect if he’d been working on it alone. Then, when it was first published to the site, apparently he forgot to change it from ‘private’ (“Video not working. Says it’s marked as Private”) which suggests he didn’t work on it alone. There are many references to ‘we’ (I thought SGS was a one-man band?) and to his ‘fellow bloggers’, including some from China (!) We see clearly, once again, the producers of the Bear videos are not on the same presentational page as the SGS blog host. Curious.


KEY QUESTIONS

In short, I am posing the following questions:


(a) What was the relationship between ZH and ‘SGS/Dalal’? Why did an established ‘news’ site choose to unashamedly push a private small business in London, ON? Did anyone working with ZH benefit personally from this arrangement?

(b) Who really produces the Bears videos? It is obvious to anyone who sees them that it is not SGS. For whose agenda are they produced to serve? Are they made by the NIA? Or ZH? Or someone else?

(c) Why does SGS present himself as a former Wall Street trader, when his history is in fact that of a small-time local businessman with a string of failed media companies behind him?

(d) Why does SGS/CEESOLUTIONS choose to so aggressively push Tinka Resources? Given SGS’ lack of formal trading credentials and his apparently close relationship with the known penny-stock pushers, the NIA, what should we make of this?



I wish to stress that I am not alleging or implying any wrongdoing in law by either the host of the SGS blog or Mr XXXXX (whether or not they are the same person). We would welcome a right to reply from SGS/Dalal and/or Zero Hedge. Similarly, if anyone has any further information of interest on the issues raised here, please do contact me. All confidences will be respected.

This is the first article in a series. This previous article sets out our motivations for examining these issues.
JdA


ADDENDUM: After the publication of this article, the SGS blog host claimed that Mr Dalal was merely the programmer behind the original website. Mr Dalal, posting as Frozen Tundra, strenuously denies being Mr Silvergoldsilver, and wishes for this to be placed on record. He claims that he simply received a stake in the project at the beginning in return for designing the website. He also says that he has no affiliation with the SGS blogspot.

Neither correspondent was willing to provide material proof of this, however.

Further, the 'programmer' explanation does not adequately address why the website was in Mr Dalal's name, why he benefited financially from a stake in the online coin shop (which neither 'SGS' nor Dalal deny), why he claimed it as his own website (i.e. not SGS's) on his Linked In profile, or why it was registered at a residential address that does not match the business address of Think Media (the company supposedly behind the website). More circumstantially, one could also question why Frozen Tundra (Dalal) has promoted the SGS blog (recalling that his stake was in the online shop, now closed) and apparently has almost identical online interests and opinions (not to mention writing style).