Don't believe the hype

Hello everyone.

Just a very quick post on the collapse in the Chinese stock market, and how it's being (mis)reported by mainstream media in China and in the West.

I'll assume all readers know that the Chinese stock market bubble has burst, and that the bursting is ongoing, with many stocks limit down today.

Reports in the media have all been saying the same things, which can be summarised as follows:

1. The Chinese government are doing all they can to stop the collapse.

2.The People's Bank of China is supporting the market, buying shares, helping brokers, and will do anything to keep it all propped up.

3. Interest rates are being slashed again to try to keep the bubble afloat.

4. Eventually, the Chinese will socialise the stock market and maybe the housing market.

Bob Pisani Revisited (a fresh look)

I recently completed a batch of data importing for the database project (link), which cleared a backlog of files waiting to be processed. The completion is a huge milestone because it finally provides the ability to search (almost instantly) for gold bars across 18 different funds, in records covering the last 18 months. So while Screwtape Files was the FIRST blog to identify Bob Pisani's mystery bar ZJ6752, we now return to the study armed with more information.

The goal remains the same ... "use the database to identify gold bars that we see in the media, for additional narrative". This gives us a larger picture for virtually no extra effort, because the hard work of building the index is already done.

Bob Pisani and me,
from the filmed-but-
never-aired documentary:
"Prosimians in the Attic".

First, a quick history for those who haven't encountered the ZJ6752 story - CNBC's Bob Pisani presented a small series on gold in 2011. We're interested in serial numbers for bars that appear on camera. I studied the clips to find more serial numbers than just ZJ6752. These are the video references (in order most interesting to least), with the ones I've taken images from, in bold. Note that the only high-resolution footage I could find were the advertisements on youtube.

1. "Gold Rush: The Mother Lode" (4.55) cnbc link
2. "The King of Refineries" (4.28) cnbc link
3. "Gold Mine" (1.56) cnbc link
4. "Gold Rush: The Bullion Trail" (4.11) cnbc link
5. High Definition Advert for the Series # 1 (0.31) youtube link
6. High Definition Advert for the Series # 2 (0.38) youtube link

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.

What's the real premium for bulk silver purchases?

Strewth, cobber, the controversy surrounding premiums for bulk buys of silver continues to rumble on.

The basic premise was that the seriously wealthy would face huge premiums of up to 30% if they wanted to buy silver in large quantities. This figure is not as random as it might appear: it first started doing the rounds when Sprott's PSLV hit a premium of above 30% (peaking at 35% before his secondary offering on 18 January). In other words, such an extraordinary premium had to be justified in the silverogosphere by grounding it in fundamentals, viz. such an astonishing premium must imply a huge shortage in the silver supply.

This shoddy thinking reached its glorious nadir in Zero Hedge's abysmal pump of PSLV, as discussed here by Screwtape's Brian O'Flanogan; a number of commenters also waded in to patiently add to the debunking.

If that wasn't enough, Sprott's second issue caused the premium to collapse to 6%. This really should have been the death-knell for one of the most ludicrous of all the silver memes floating around on t'internet. I mean, if a premium of 35% implies a shortage, then presumably one of 6% implies a sudden glut in supply? Which would mean that Sprott's sudden large purchase of silver had somehow increased supply! It's enough to make one weep. This chart (courtesy of gotgoldreport.com) shows quite clearly just what a bad deal the holders of PSLV got in comparison with those of SLV:

But, one should never underestimate the resilience of silver religionistas memes. The facts never get in the way of a good bit of propaganda, even if all it takes is about five seconds' thinking to realise that the propaganda makes no sense at all. The great and the good of the silverogosphere continue to chant the new axiom that silver is unobtainable for less than a 30% premium when buying in bulk. The meme has legs, and all efforts to kill it at birth by the more rational parts of the community have failed.

I'm going to have one last go, before giving up. In recent private correspondence I was challenged to find ways of buying a million ounces of silver without incurring hefty premiums. So, I borrowed $34,000,000 from GM Jenkins (using the indentured slavery of my first born as security, as per his usual terms) and decided to do a bit of silver shopping. Here's what I found:

1. I could buy some silver futures contracts on the COMEX and stand for delivery. This way, I will get the silver at a spot price that I think will be a good price in the future (e.g. a few weeks ago, I could have easily picked up some futures for silver at $28 an ounce, which would have been a great deal; but even today, I could buy some futures at $34 an ounce quite cheaply). The costs associated with this will be the broker's contract fee and commission for the trade (a tiny fraction of a percent for such a large trade) and some storage or delivery costs once the contract is closed (again, this would be a tiny fraction of my $34 million order), plus some insurance. A bonus for conspiracy fans out there is that by doing this I'll be contributing to the collapse of the COMEX [/sarcasm].

2. I could buy and redeem SLV. Basically, this needs to be done in 'baskets' of 50,000 iShares. So my $34,000,000 will get me 1,031,553 iShares of SLV (before open of play on 29 January, silver is at $33.99 per ounce and SLV is at 32.96). So, let's say that I'll buy a round million iShares which will get me 20 baskets. The 'premium' will be what the iShares prospectus describes as 'applicable fees, taxes, expenses and charges'. One of these fees is $2000, which is neither here nor there if you're splashing out on $34 million of silver with GM's hard-earned cash. The rest adds up to just a few percent [if anyone can do this calculation more precisely, then I'll be grateful, and will add it to this post with an acknowledgement].

3. The Perth Mint is (at the time of publishing) selling silver 100-oz bars at 2.4% over spot (i.e. $34.65 as opposed to their last quoted silver spot price of $33.84 spot price) So, I'd need 10,000 of those. However, the Perth Mint Depository’s standard premium for 1000-oz bars is $0.20 per ounce over spot, which in practice would usually be stored in their vault. But for buyers of size (High Net Worth individuals), they will do “cash and carry” if requested and - for delivery to the USA by sea - an additional three to five cents over spot should cover freight. So purchase and delivery would come in at a rather tasty 0.74% premium. [Many thanks to Bron Suchecki of the Perth Mint for this information.] I'm sure every other major bullion seller around the world would also have similar fees and services for HNW clients and I wouldn't be surprised if there were some quantity discounts of list prices.

4. GoldMoney: If you don't trust the evil SLV, then perhaps you'll have more confidence in a White Knight in the form of James Turk. Here you can see GoldMoney's rates. Not surprisingly, the more you buy, the lower the rate. So a million dollars or more will get you a rather nice 'premium' of 1.99% for physical silver. And they'll deliver it to your house, if you like (although that will cost you a couple of percent extra).

I found about a million (well, half a dozen) other ways of getting my bulk purchase of silver for a low premium, but I don't want to labour the point...

So, to answer the exam question, 'what is the rate for bulk purchases of silver', it is between almost zero and 2%. That's quite a long way from 30%, I think you'll agree. Now, the die-hard cynics amongst you might say, 'well, that's all well and good in theory, but can you give an example of someone who has actually recently bought a large amount of silver without paying 30% premiums?'

Funny you should ask that. In fact, I know of a certain Mr E. Sprott of Toronto, Canada, who - according to the publicly available records of the PSLV Trust - has just bought 8 - 9 million ounces of silver (and rumour has it that he didn't even need to borrow the fiat off GM to do so...) I don't want to blatantly plagiarise someone else's work, so please check out Kid Dynamite's analysis, which shows quite clearly that Eric picked up his shiny stuff at very close to sp(r)ot(t) price.

Now this should come as no surprise. There are three incontestable facts about billionaires. The first is that they are very, very rich. The second is that they didn't get to be very, very rich by paying a 30% premium for something that they can get for almost no premium at all. And the third is that they tend to employ very smart, efficient people, who lose their jobs very quickly if they waste their employer's money.

So Sprott probably just got his people to buy his silver on the COMEX, at virtually no premium. Sprott cheerleaders on the silverogosphere then went around implying (again) that silver was in a shortage, and the premium-to-NAV proved this (even after it crashed).

It is, in fact, precisely this level of chutzpah which distinguishes filthy-rich billionaires from unpaid small-time bloggers whose eldest children are now condemned to spending the rest of their years darning GM Jenkin's socks...

Bankster Shills

The thing I love the most about this blog is that the contributors are a collection of very different individuals, with very diverse views. I think it's fair to say that we're all generally bullish on the PMs, and that we have declared positions in gold and silver, but apart from that our only unifying trait is that we love debate, getting to the heart of the matter, and seeking to dispel myths and shoddy thinking as often as we can. If we see something we disagree with, we probe and challenge - including our fellow contributors' views.

Unfortunately, this approach has done little to endear ourselves to certain quarters of the PM community. Although that's a shame, it's perhaps understandable given that we're often a bit cheeky and polemic (or just good old-fashioned devil's advocates). However, what is less understandable is how a brand new PM meme has started doing the rounds: i.e. that the Screwtape Files is a fully paid-up psyops front for bullion banks.

The abuse in some parts of the blogosphere has been predictably banal and depressing, spiked by Brian O'Flanagan's recent question about the relationship between ZeroHedge and Sprott's PSLV. Here are a few of my favourite recent comments about Screwtape, taken from a number of sites, including ours (the asterisks are my addition, for those of a nervous disposition):

Tyberious: Those little piss ant, SLV, GLD, c*ck suckers[...]What the f*ck! They shall have no quarter here![...]I know these guys a paid shills for JPM, or whatever banks' d*ck they suck! Look nothing against homos, but these guys are whores! For all those that are new, these guys (KID D*CKINMYASS [sic], and butt buddies) pray on the ignorant and pretend that all is well, like there is no manipulation in the PM markets, that SLV and GLD actually have the metal they report to have and they attempt to spread misinformation and worst of all they f*cking do it for money!

PaidInFiat: Jeanne, eat a d*ck. How's that for an explanation? [and, later] Jeanne darc, gobble a donkey d*ck, you elf.

Silver Stacker: I don't doubt what you say, but I don't believe it either. It equates to me stating that the contributors to this blog like to suck each others d*cks and blow loads in each others faces.

Bay of Pigs: They are useless tools on gold or silver, IMO. Better off to ignore them. They have deadpanning gold and silver and supporting the MSM status quo since I can remember. They don't acknowledge anything being wrong/corrupted in the markets (especially the COMEX).

Green Lantern: That must be where the trolls go after they have finished flaming Turd on the main blog. I guess they need a place to wet their whistle also. From simply a journalistic point of view, did you notice that his entire blog is dedicated to flaming individuals/sites and point of views and rarely puts forth his own world views?

Ledbedder: Looks like the boys and girls at the other blog are green with (fake gold) envy.They think because they write "articulately" that they can fool some folks. Go right ahead, try. I honestly do not know anyone that can make an argument against the PM's not going higher over the next few years. Yes, 2011 wasn't their best, but look at the 10 years before that. Guess a decade isn't enough data to go on. That was my roughly written 2 cents as I didn't get a degree from Brown or HAAAAAAAAAAAAAAAvard. One last thing, look down your noses at us because we type swear words, who cares? Tell us you don't let out a good "F*CK" when you bang your shin on the coffee table. Liar.

SGS: Yeah. These morons, especially kid dynamite [sic] are part of a paid JP group to discredit us.

Anonymous: Screwtapefiles is just a front site run by the Bankers. Zero credibility there.

Anonymous: screwtape has zero credibility. The people authoring there have been exposed and countered many times before. It's a site of the banking shills, by the banking shills and for the gullible.

SGS: Dont come back here. You realize that I know who you are now. My tech seems shitty on the front end, no[t] so bad on the backend. You've been warned.

Lovely. What is very striking about such posts (and there are many more) is the level of visceral hatred for those who do not necessarily share their world view or - more importantly - the world view of their heroes. It is also hard not to pick up on a certain amount of deep-seated auto-erotic tension, which I imagine would be better released in a more amorous rather than aggressive way - but I'll leave that train of thought to the psychologists.

However, what is utterly conspicuous by its absence is any attempt to engage with the question at hand, to refute it through evidence, or to present a coherent counter-argument. Responses are limited to either "you're a c*ck sucker" or "you're a bankster shill".

Now that's a bizarre approach. Let's say for a moment (for the sake of argument) that they're right, and the only things we love in life are violent oral sex and getting fistfulls of dollars from JPM. How, exactly, does that refute the facts we have pointed out, or answered the questions we've posed? It's simply a diversionary tactic to avoid answering the difficult questions. So we are forced to ask: why would such diversionary tactics be used by certain elements of the PM blogosphere? If what they say is an open-and-shut case, why respond with abuse and allegations, rather than simply presenting their evidence and explaining their reasoning?

It is obvious to anyone who has ever read Screwtapes that we are not paid up Bankster Shills. We all give our time free to this site, despite us all having extremely busy day jobs and family lives. You will notice that there are no adverts on this site, and there is no donation button either. We make not one penny from this site by any means. We strive to hold the highest levels of integrity, and make full disclosures when necessary.

Sadly this cannot be said for other elements on the web. Some sites earn serious cash from their traffic, and others have direct links to those with a corporate interest in promoting precious metals. Not all sites - and I want to stress that. There are good guys out there. But suffice to say that the supposedly 'independent' content and advice peddled on certain PM sites is often as partisan and sponsored as that which emanates from certain parts of the MSM about which they scream foul on a daily basis. Corporate shills by any other name. I will expand on some of these themes in future posts.

Most of us are long the PMs, and most of us accept that there is a degree of manipulation in the PM markets. But we refuse to subscribe to the cartoon version of evil empires and wicked witches; a world of Zionist plots and farting bears. If a claim is made, such as Sprott's delivery problems or DSK's imprisonment at the hands of the Cartel, or a problematic gold bar in a vault, then we will investigate it. If we find it to be true, we say so. If we find it to be false, then we say that too.

This refusal to blindly accept all we're told, or to unthinkingly cheerlead the latest silver memes does not make us 'anti gold' or 'anti silver'. It does not make us 'perma bears'. And it certainly does not make us Bankster Shills. We value your comments, and we want you to challenge us (politely). If shown the evidence we will change our views on the spot.

We are beholden neither to the banks and Wall Street, nor to those with an interest in selling as many coins and bars as possible.

And it is that which makes us the most independent PM site on the web.

Zero Hedge ZJ6752

An interesting article at Zero Hedge today, which has a story about Bob Pisani’s visit to the GLD vault. The thrust of the story is that the Rand Refineries bar with serial number ZJ6752, does not appear in the GLD bar list. Our database has records from 20th June and I can confirm that the bar does not appear in the last 45 published documents. Eagle eyed Zero Hedge reader ‘The Grifter’, located an old copy of the GLD bar list from November 2009 on way back web with a bar from a similar number range, but not the bar itself (thanks Grifter, we’ve added this file to our data library).

We’re happy to announce that we found the bar, but just not in the GLD data. The bar currently belongs to ETF Securities. For those wanting to relieve their angst about the mystery identity of the bar, can check the following (zipped) spreadsheet, specifically work-sheet “MSL Gold”, row #10590 (Website bar list 2011-08-31.xls).

Note that the fineness for this bar is 0.9989, which we get a glimpse of that just briefly in the video (click for large version / close up).

As far as we have dug, this bar first appeared in the ETF Securities list on 21st July 2011, which at least gives a window for the timing of Pisani’s mini-documentary – however in all likelihood the bar had been in the vault since it was cast in 2009. The HSBC vault holds gold for other funds, so basically what happened is that the bar which was picked up, just happened to belong to ETF Securities (and not GLD) and no one on the TV crew bothered to check.

This find was a bit of an anti-climax for me, since it dispels the main conspiracy thrust so sought after by most of the commenters at Zero Hedge. The article is not completely without merit, since the gold bar shown did not belong to GLD – so in terms of ‘proving’ the GLD holdings, that’s really sloppy work by Pisani and HSBC. Maybe they showed him the wrong vault? But - the article was great because I would not have seen that video clip otherwise – it reveals a lot about the way HSBC work with that massive repository (for example, it looks like there is not too much physical segregation going on). On a frame-by-frame sequence with the video there are actually a bunch of other serial numbers seen and if I get the time I might match these up as well, but overall we get the picture – namely that HSBC hold a whole stack of gold bars and they don’t all belong to the same fund.

Watching the video sequence a few times, I do think he flips that bar around a bit too quickly though ... 400 ounces is actually really heavy. That thing looks really light :)

P.S. For anyone interested in the Rand Refinery numbering system, according to my book the two-digit and four-number system was first introduced in 1921, and the two letters are chosen at random and get changed once the full 9,999 bars are manufactured for that sequence.

P.P.S. This article was followed up a year later with more detail. (link)

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).