Saturday, December 11, 2010

Happy One Monthiversary!

It is currently 3:00 EST on the 11th so we have officially completed one full month as the greatest, most comprehensive and fun precious metals blog on the planet. What a month its been! I was amazed when, the very first day, we picked up a couple of "followers" and got 2,500 pageviews. Having some experience in starting a website/web-business from scratch, let me assure you that 2,500 pageviews is a lot. This week, we had 3 days of 12,000+ pageviews and we now have 126 followers. For the first month, we accumulated 166,442 pageviews. These are truly amazing and mind-blowing figures. Thank you all so much for making this a success and I don't mean materially (though your generous donations are greatly appreciated). The success I feel comes from you, my dear reader, recognizing value in my posts and the terrific comments your fellow readers make. That value is vindicating and very rewarding. Again, from Mrs. Ferguson and I, thank you very much for being a part of the fun!

OK, two quick things to consider over the weekend. First is a new report from Rob Kirby on the derivative exposure of the Evil Empire and assorted other TBTF banks. Rob runs a subscription-only site so I can't give you a link to the full report. Harvey Organ, however, posted a summary today so, I figured, I can probably copy and paste what Harvey wrote, right? Well, anyway, here goes:

  • The BIS tells us that total global outstanding “other precious metals” derivatives are 127 billion.
  • General market wisdom [gleaned from OCC Commercial Bank data] suggest that J.P. Morgan and HSBC are the two dominant players in silver [other precious metals]
  • Yet, the U.S. OCC tells us that J.P. Morgan and HSBC combined – make up 13.577 billion of the 127 billion BIS total [roughly 10 %].
  • The U.S. OCC tells us that Morgan Stanley and B of A and Goldman have an additional combined 70 TRILLION in derivatives – at the Bank Holding Company level – but they give us NO HINT as to what portion of these totals consist of precious metals activity. We are left to assume that this is because the OCC is only mandated to regulate Commercial Banks – while Bank Holding Companies fall under the purview of the Federal Reserve.
  • Unless J.P. Morgan and HSBC are LYING to regulators as to the extent of their silver market activity – there are other MASSIVE players in the silver price suppression game. Who ever these ‘players’ are – metaphorically, they MUST BE BLEEDING FROM EVERY ORIFICE with silver’s parabolic run up in price over the past few months.
  • Most likely among American entities are MORGAN STANLEY, B of A and Goldman Sachs – since together they are operating a 70 Trillion derivative “BLACK BOX” about which we know LITTLE to NOTHING as it pertains to precious metals.
  • Any way you slice it – precious metals data reporting on the part of American regulators is atrocious. Simple MATHEMATICS tells us a gold / silver ratio at 48:1 is EXTREMELY contrived and REEKS of manipulation on the part of the Federal Reserve and the Banks they are charged with regulating.
Got any physical Gold and/or Silver yet?

Harvey then added his own comments:

The BIS 3 weeks ago recorded that the total G10 banks and Switzerland had a derivative risk in silver of 127 billion dollars.  The BIS is only interested in risk and they net out all longs from the shorts.   They are only concerned with a risk of a failure to deliver.  The OCC which monitors all of the USA banks with respect to derivative risk  (and they report this to the BIS) reported just recently that JPMorgan and HSBC have a derivative risk of 13.557 billion dollars out of the 127 billion reported by the BIS.  The key question is: where is the remaining  114 billion dollars worth of derivatives for silver? And with a total market for silver of around 16 billion dollars, why on earth do we need 127 billion dollars in derivatives?
The bulk of the shortfall with respect to JPMorgan and HSBC are made up of forwards done at the LBMA.  This is the true short as they must supply the metal at a forward date in time. It seems that JPMorgan and HSBC has called upon their co-conspirator banking friends to quell silver's advance by underwriting massive calls without any backing at all.
We saw evidence of this in November when 4.5 million oz of options exercised for silver hit the floor of the comex.  This sent the comex scouring the planet for much needed silver to supply patient longs standing for delivery.  This was happening at the same time that Ireland was having problems with their debt and their banks, and the mints having record sales of silver. The Sprott silver fund PSLV finally got their licence to proceed to acquire the 22.3 million oz that is now in their possession.
The huge rise in silver has now caused our banks to bleed  profusely as silver has advanced 65% during these past 6 months  ($28.00 from$ 17.00) whereas gold has advanced only 15%  ($1380 from$ 1200).
This is the primary reason for the raid by the banking cartel.  They are trapped and cannot get out of their mess.  JPMorgan and HSBC have the bulk of the derivative forward risk.
The remaining banks have massive calls written on silver not owned by them.  The banking cartel have further problems with the huge paper silver deposits taken in all over the world by banks with no silver backing.  In gold, we are hearing that the banks are trying to get their hands on allocated gold to settle on very litigious longs that cannot get their desired physical.  (see KingWorld News..Jim Rickerts).
In London England we are witnessing gold and silver both go into backwardation as the spot owners refuse to risk their physical for a fiat gain. Collectively, they have determined that the physical supplies in silver and gold are extremely sparse.  A default will occur in London before it collapses on Comex. end.

Alright, now that you've read this stuff, it puts context into what Dan Norcini discusses on the "Weekly Metals Wrap" segment on KWN. I encourage you to take a few minutes to listen this weekend and every weekend. Kick around Eric's entire site, too. Lots and lots of good info there. Here's the link to KWN:

That's all for now. I'm going to go watch Army-Navy though I never know which side to root for. I met a guy yesterday who just completed his third tour in Afghanistan in Special Forces. Amazing, great guy. I think I'll root for Army today just for him.
Turd out.


  1. Great blog !!! Followed you here from ZH (still reading ZH though :D)

    As a suggestion, could you write up a list of books / sources from which a newbie can educate himself in field of PM and commodities in general.

    Keep up !!!

  2. Good question, Selfish Man. I'll work on it.
    Maybe a "Turd's Holiday Reading List" kind of thing. I like it!

  3. Thanks for a Great Blog Turd!

    No-one has really explained WHY JPM/HSBC took such large short positions in silver in the first place. I believe they have taken even larger silver calls and when they are ready they will use the covering of their shorts to drive the market much higher than even we can imagine, resulting in astronomical profits on their long-side derivatives. Profits that will dwarf their loses on the shorts. It's the only strategy that makes sense.

  4. Thanks to you Turd.

    Great blog. Keep up the good work!

  5. RoCoach: sorry but I believe the reason JPM is so short silver and gold is at the direction of the Federal Reserve and Treasury. Don't forget, the stockholders of the Federal Reserve, are, the big banks! The short position has been accumulated over many years to make our worthless fiat currency the US dollar look good. The dollar would not be looking so good if manipulation like this were not allowed. For example, if the price of gold and silver were freely allowed to float up to say 2,500 and 150 an ounce, what would the price of oil, copper, cocoa, wheat be? That's why they suppress the price of gold and silver. But the internet is now giving all of us commoners access to true information. Just look at what's happening with wikileaks. Once true information is gained, the end is near. We now have Max Keiser's buy an ounce of silver to bust JPM going viral. When there is no more gold and silver in the LBMA and COMEX warehouses, the jig will be up. The price may very well be astronomical. Be sure to own some physical gold and silver. I own PSLV, the Sprott Physical Silver Trust.

  6. I've enjoyed the blog.

    Thoughts on what will happen to the futures market when the EE falls apart? If small gamblers(not investors) Have purchased futures options do you think that they will be honored?
    What time frame before futures Armageddon?

  7. I too wonder if futures options or SLV calls will be honored. When the sh!t hits the proverbial I can easily see them being frozen or rolled-back as if they were never written. So yes, bigger potential gains with derivatives, but perhaps more safety in physical.

  8. Top man Turd.I am sure everyone appreciates your efforts on this blogg.Long way to go yet my friend to see off the EE,however every gramme of physical numbers their days,to much funky shit has been going down in the city for too long.All the best from snowy England.Take it easy,Bob.

    Buy Silver,take down a bank,its your Patriotic duty.

  9. Coach: Here's what I think, in brief:

    The US Govt and Fed have been debasing the dollar for almost 40 years. You can see this demonstrated in the wonderful work done by John Williams at ShadowStats. It is in their interest to continue to underrepresent the true level of inflation because higher inflation invariably causes higher rates Keeping rates low has only gotten more important over time and. obviously, it is paramount today.
    If gold and silver were to reflect their true value, truly adjusted for inflation over the past 30 years, the prices would skyrocket and the general public would be keenly aware of the disastrous, evil policies our political class has followed all these years.
    So, one of the critical pillars of US financial manipulation is the control of precious metal prices. JPM et al, at the behest of The Fed, sells unlimited "paper" to suppress price, thereby helping to create the illusion of low inflation.

    This would be a great conversation starter for a weekend thread. I'll try to write a more detailed explanation of my beliefs in this regard next Friday.

  10. Nice little read from the Hedge on silver manipulation.

  11. Regarding why they took on such crazy short positions in gold and silver, I remember FOFOA's favorite "Another" and "FOA" stated that in order to get cheap oil Western CBs entered a gold for oil deal w/ Saudi Arab (who knows the value of gold pretty well due to culture or historical reasons) which required gold price be suppressed in open market. The deal faded in 90s after gold in open market was drained that left behind a pile of naked-short mess to clean up. It's an interesting take which is inline with "making Dollars artificially strong" reasoning.

  12. @Turd:
    Awesome :)
    Don't hesitate to include some TA (you seem to be very well versed in technicals) gems on there as well.

  13. When the Hunt Brothers accumulated a position representing an estimated 33-50% of the physical silver available in 1980, the rules were changed by the Death Star, the price plummeted, the Hunt Brothers lost big big time and were eventually charged for manipulation. 30 years on, the same situation has happened, on a much much larger scale (the position of the EE is many many times the total amount of physical silver available, and not just a percentage of) but on the short side, but what has happened? Obvious case of double standards by the people in power!!

  14. Turd, is there a way to send you my observation that's too long to post here ?

  15. I've used before.

  16. I tend to believe that once the Government and the large banks saw how easily TWO guys could manipulate the entire market up to astronomical levels fairly easy. (Remember $50 was worth a hell of a lot more back then) They got the idea that it probably could be manipulated down as well. Makes sense right? And it has worked really well for along time.

  17. Finally figured out how to comment here! (So much for computer programming experience!)
    Every time I see you avatar, I think you look like Jeff Foxworthy (crazy, no?) I hope no one thinks I look like George Washington in 3D-shades (all my powdered wigs are currently being re-powdered! :>D) In any event, keep up the good work.

  18. This comment has been removed by the author.

  19. Bloomberg interview with Gijsbert Groenewegen, founder of Silver Arrow Capital Management ("silver" in name is a coincidence):

    He is expecting a market crash in Q1 2011, sees more (percentage) upside in silver than gold, sees $40 or $50 for Silver, expects gold to be confiscated when the SHTF and sees that as another reason to hold silver.

  20. Happy Anniversary Turd,

    Another first, a lengthy disclaimer. Someone on ZH put it best, "If you can't trust someone you've never met, who writes on the interweb under the name Turd, who can you trust?".


    "...In his note to private clients yesterday, silver analyst Ted Butler had this to say... "What has come to be my central theme over the past year or so, is the inexorable march towards the resolution of the silver manipulation. My premise has been that one way or another, the 25-year downward manipulation of the silver price, via excessive and concentrated commercial short-selling on the Comex, would be terminated in the relative near future. There have been many milestones indicating the end is near for the manipulation, not the least of which has been price behavior, as silver has moved to a series of new 30-year highs."

    "The two leading contenders for causing the end of the silver manipulation have been a silver physical shortage which will bring a certain end to the scam... and potential regulatory actions which would end it sooner by enforcing the spirit of commodity law. Based on recent developments, it's starting to appear that it has turned into a real horse race as to which contender passes the finish line first." ..."

  22. Good set of news item links, past and present, for PMs at Casey Research, Ed Steer's Gold and Silver Daily:

  23. This comment has been removed by the author.


    Chris Walen (banking analyst) says

    # BoA is insolvent; should be restructured;
    # In 2011, most home sales in US will be involuntary foreclosures, dragging down housing prices.
    # California will default; unemployment and rising foreclosure sales will hit sales tax and property tax revenues
    # Spain is a disaster; Spain is the Florida of Europe; profound problems with Spanish asset quality
    # sees interest rates going higher next year; higher rates will send stock markets down

  25. As it appears to have become relevant again in the overnight discussion, I will repost a link I posted at the end of the previous thread:

    This is a link to Ted Butler's most recent free article (ie not to subscribers only) wherein he proposes a "1% solution" to guide the setting of REAL position limits, as will be discussed on Thursday by the CFTC.

    This was published Sept. 14, 2010; Mr. Butler asked his subscrobers to write some form of the sample letter he provided to the CFTC so that it would be recorded in the public comments.

    Perhaps not surprisingly, there was an overwhelming response. Almost 90% of the public comeents of ANY kind were specifically about silver. Amongst others, Bart Chilton took serious notice of this, and actually CHANGED his previously stated position.

    Note the email addresses of ALL the CFTC commissioners listed at the bottom of the article. These are valid addresses.

    I would think anyone seriously interested in having their voice heard should utilize their perogative as a citizen to contact the Commissioners THIS WEEK. Particularly Mr Chilton has been quite responsive to emails written to him.

    Let us NOT lose faith in democracy and the power of the VOICE OF THE PEOPLE.

    Thursday's meeting is VERY important; the more voices heard (in a polite professional manner of course), the better!

    PS Go Turd -- sorry about Army. 9 straight losses! Ouch!

  26. WOW!

    Just amazing when something like this gets published in the mainstream NY Times:

  27. whaddup Turd. Been following your blog since your shameless mentioning on ZH and thank you for it. ZH...I'm fairly new there as a commenter but read for a long time. awfully trolley even though there is piling evidence of massive, fraud, corruption and self interest in the financial space. I am a student of history and recognize a death rattle when I see it and plan accordingly. I firmly believe precious metals will play a role in events to come, but all in all there are other tasks to complete. Insomuch, yours and harvey's blog give some very concise info in the metals space and it is very appreciated.

  28. One month... and what a month it was! Three weeks of daily gains in PMs (and the miners), then the reality of fraud and corruption hits hard last week... next week, who knows?

    Thanks for putting the pieces together for us, and giving us another forum to vent!

    SRV ES339

  29. Its already monday...may you have a good week dear Turd and Turdites.