Plenty of evidence in this thread that strengthens Iain McGilchrist's thesis about the Left Brain’s dogmatic model making.
If your model is wrong, ditch it.
You will survive the trauma.
Yip, I used to believe the Ted Butler and GATA stuff. I used to believe the KWN posts from the "London Trader" but when I recently listened to an interview with Andrew Maguire at TFmetals I became convinced the "London Trader" is actually Andrew Maguire. They sound awfully similar, even using the same figures of speech. What set alarm bells off in my head is when he started suggesting that people who sign up for his services make sure they take a portion of their profits and buy physical silver, because only by taking physical delivery would they bring the Cartel to their knees! The emotive rhetoric, the talk of taking bringing down an Evil Cartel and the idea that a handful of mickey mouse retail futures traders would save the day made me realize I had heretofore been duped.
I bought into arguments like the allegation that JP Morgan was short a gazillion ounces of silver, when there is no way they could reasonably deliver a fraction of it, painted them into a corner where they were forced to manipulate the prices lower. Two main problems I had were a) are the guys at JP Morgan really that stupid, to get into a postion like that in the first place? and b) if they fight rises in the price of silver by constantly "adding new shorts" and capping the price, why don’t some other big players just keep adding longs and overwhelm them?
A while ago I read of a wealthy guy who speculated on an oil exploration stock, exploring for oil somewhere in cental africa. He had let it be known that he not only owned a lot of shares, but also had a large long single-stock futures position on the stock. Well, as soon as it was known, traders smelled blood and he was given a hiding. I read the interview with him where he admitted losing a fortune and regretted taking on such large leverage. Why wouldn’t something similar happen to JP Morgan? How do they get away with it for so long?
Also, I found it hard to imagine that central banks would blindly continue to dispose of their physical gold reserves year after year (as GATA alleges) just to make the dollar look strong because surely they’d reach a point where they’d hold back and realize it was a losing proposition? But in these pages or links provided I’ve read about the effect of a mass of fractionalized unnallocated gold accounts, and just how many thousands of tonnes of gold are held in this way. This is not the kind of analysis I ever read from GATA articles.
Finally, how did these guys manage to profit (as is alleged) on such a lop-sided short position when the prices of gold and silver have gone through the roof over the past ten years? Is the Fed printing money directly to provide them with margin?
Even though I scratched my head over some of these things I figured the main story, as promulgated by GATA, Butler et al, was essentially true. The thing that has opened my eyes is the discussion of the LBMA and the OTC market. This gives a whole new perspective to what is going on.
Whether central banks are involved in deliberately pushing around the gold price to a small or great extent is still an interesting question, in my opinion. I still think it’s plausible that some central banks have an interest in seeing that the gold price behaves a certain way at certain times. If they do, to what extent it happens, I am not sure, but GATA, Jim Sinclair, Ted Butler, the "London Trader", Harvery Organ don’t have the answers.
Warren at screwtapefiles has been downloading the various ETF bar lists on a regular basis for some time now and has a substaintial database. He is working on a very serious analysis of it to see if there is any proof the bar lists are faked. Preliminary discussions I’ve had with him says it is legit. When that analysis comes out it will bust the "ETFs don’t have the metal" meme.
This was always a bit of a distraction anyway, as the real issue is the legals as discussed here http://goldchat.blogspot.com.au/2008/12/warning-on-existing-au-and-new-ag-pt-pd.html
PSLV may be better, but I certainly wouldn’t be paying any premium for any ETF. You did well to get out. I actually struggle to understand why Sprott decided on a closed-end fund structure rather than an open-ended one due to the potential for premiums AND discounts (maybe tax advantages). On discounts, one day when the bull market is over and everyone is exiting, I will not be surprised to see closed-end gold and silver funds trading at a discount - investors are reliant to some extent that the operators will step into the market to buy the shares to ensure a fair price.
Erik - can I safely assume you are ignoring my query about why gold never rises above 2%? I have asked you for commentary on it 2 perhaps 3 times now and…silence. If you are unable to respond, I can respect that. Simply defer to one of the other "experts" - such as Bron or Jeffrey.
As it relates to credibility, lets put the same scrutiny on Jeffrey Christian as you put on Ted, Harvey and others. As an example - immediately after the debate at GATAs conference between Jeff and Bill. Jeff did an interview with Kitco TV and stated that Andrew Macguire cant be trusted because the CFTC never acknowledged receiving any emails from him which was blatantly inaccurate as there were 2 exchanges between Andrew and the CFTC regarding that matter.
I have yet to this day heard any kind of retraction from Jeffrey regarding this. Jeffrey was wrong - he made a blatantly inaccurate statement which was intended to suborn the credibility of an opposing point of view.
By your standards - Jeffrey Christian belongs in the same category as Ted and Harvey and others.
Jeffrey Christians interview - http://www.youtube.com/watch?v=TUu7MNw7fF8&feature=player_embedded#!
Bart Chilton (CFTC Commissioner) even thanked Andrew Macguire for bringing the matter to his attention and has publicly stated that the silver market is actively manipulated and that the perpetrators should be prosecuted.
http://www.kingworldnews.com/kingworldnews/G+_Articles/Entries/2010/3/30_A_LONDON_TRADER_WALKS_THE_CFTC_THROUGH_A_SILVER_MANIPULATION_IN_ADVANCEBy_Andrew_Maguire.html[quote=bronsuchecki]
Bron - as you are no doubt aware, there was an issue with CNBCs work in trying to "prove" that GLD actually has the gold they purport to have. In fact, during the video the only bar they showed where you could see the serial number clearly was NOT a bar in GLDs inventory. Screwtape did some analysis of this (along with ZeroHedge and others) and here is a link to Screwtapes findings…
http://screwtapefiles.blogspot.com/2011/09/zero-hedge-zj6752.html
Couple conclusions I come to. Firstly - they are purported in a GLD vault, but, the bar they show belongs to another fund? Who’s vault were they really in? Secondly, that bar that Pisani holds up and twirls around is 400 ounces - supposedly. That seemed kind of light - a point that even Screwtape brings up.
I guess three comments deserve some responses here.
1. Jim H wrote….
”If you listen carefully to the CM interview, you can pick up one quick exchange that is a perfect example of the kind of useful observation that somebody like Harvey can make.. due to his closeness to the Comex, and long history of watching it. He says, and I am paraphrasing here... that "deliveries used to occur in the first two days of the delivery month.. and now they spread them out all month". The implication is that Silver for physical delivery is hand-to-mouth. If you take a long term view of the decline of inventories of deliverable Silver, then his observation fits with these other facts in painting a picture. Eric Sprott made the same comment last year when he made one of his (infamous) additions to PSLV.. how long it took to get the bars.. and the fact that they were freshly poured (date stamped).”
Over the past few years shorts began delaying delivery into their Comex futures contracts into the end of the delivery month because they could earn nearly an extra month’s interest by leasing the metal out with no price risks. As lease rates fell they tried to squeeze every extra cent out of their leases. As prices rose, they were earning a lot more on the leases.
As I explained at the Silver Summit last year, assume that one is leasing silver out to fabricators at 3.0% per annum. In the first quarter 2010 silver was at $16.92 average price, and 3.0% interest meant $0.51/oz lease income per year, 4.25 cents per month. By the third quarter 2011 silver was at $38.86 average price, and 3.0% interest was $1.17/oz per year, 9.75 cents per month. (So much for pushing JP Morgan into bankruptcy by pushing silver prices up: Instead, they recorded record profits on their silver book in 2011.
Since their short is a hedge of an offsetting hedge, they are price insensitive on when they deliver it. It was more profitable for shorts to wait until the end of the month to deliver into their short futures contracts. (Bankers earn more than conspiracy theorists because bankers seem to be more intelligent, and to think about the financial consequences of actions, seeking to maximize their revenue.)
We explained all of this in our reports over the past two years ago, and to the investors who retain us as advisors and wondered why they were getting deliveries late in the month rather than early in the month.
Regarding Sprott: They got hosed. We spoke with Sprott people about their delivery problems, as well as with bankers. They handled it dreadfully, and did not require the banks to behave in standard market operating procedures. Why, we don’t know, but they did everything wrong the way many rank amateurs do. Sprott is an eminent salesman, however: He turned lemons to lemonade, saying not that he was an amateur in buying all that silver, over-paid, and was messed over in delivery. Instead, he said it was because there was a problem getting the physical silver. There was no problem with the silver; he just did not negotiate and handle the bank properly. No surprise there to anyone who has watched his funds over the years.
2. Strawboss asked for an apology from me for saying the CFTC never acknowledged Andrew Maguire’s emails.
I don’t have to apologize for saying the CFTC never acknowledged receiving any Andrew Maguire emails because it has not. You have never seen any communication directly from the CFTC acknowledging that they received the purported emails in January and early February 2010.
What you have seen was Andrew Maguire or someone saying he was Andrew Maguire giving KWN, a known disreputable source of information, what that person said was a string of emails between Andrew Maguire and a person at the CFTC.
That person does not work at the CFTC as of now, April 2012, and the CFTC declined to verify he had been an employee in January and February 2010. So, he may never have actually worked there. (Science is based on reproducible results; I can call someone up and verify that he sent the emails. Frauds are perpetrated on the assumption that people will not try to reproduce the results, call to verify a person even exists.) Furthermore, look at the alleged responses: They are totally noncommittal. Mr. Maguire is saying he has all sorts of inside information. He is screaming the house is on fire, and that he has concrete evidence about something the CFTC has investigated rigorously for more than 20 years, and has published two unprecedented public reports about the matter. The CFTC’s response, according to Maguire’s papers is, “Thanks, sir.” One could say it is typical bureaucratic ineptitude, the sort that let Bernie Madoff get away with his Ponzi scheme for so long. It could be. One could say it’s because the entire staff of the CFTC is part of a cabal seeking to suppress silver prices. That seems unlikely. One can say it’s not even a real response from the CFTC. That seems reasonably likely. Or, one can say that it is a real response, and they have heard such BS before from what Erik T. accurately describes as charlatans, and said, thanks but no thanks. If the latter, it is strange that the CFTC never acknowledged that.
You probably have heard that sometimes disreputable people make up communications to try to prove a point. You read someone saying he was Andrew Maguire saying the CFTC had responded.
Turning to Chilton’s comments: If you listen carefully to Bart Chilton, as you must given the political nature of that person, you will see he did not thank Maguire for any emails, but for bringing the matter to the attention of the CFTC, which easily could have been a reference to the media circus perpetrated on the silver market by GATA after the CFTC travesty hearings on open interest limits. Chilton’s famous comment that he believes the silver market is manipulated often has the very important qualifying statement he made cut off by the charlatans: He said, based on information he had received from people outside of the CFTC (GATA and their ilk) that he thought the silver market was manipulated, adding that his view was not predicated on any information he had received from investigators inside the CFTC. (Anyone on a jury would want to know about those qualifying characteristics. Any ‘reasonable person’ as defined by law. Anyone trying to bamboozle his readers would want to drop those qualifiers off in the ‘editing’ process.)
So, it’s not time for me to apologize, because all of the evidence presented by the Maguires, Butlers, GATAs, Organs, and others has been inadmissible into any court of law, and would not pass the legal guidelines for a reasonable person to believe any of it. Which takes us back to where Erik Townsend started all of this: You are not dealing with reasonable people, you are dealing with True Believers of the first degree, and the propagandists who feed off of them.
One final point: To say that Organ is a good dude because he has told people to own physical gold and silver rings completely hollow. I have advocated holding gold and silver since the 1970s. I’m a good dude. Many others have too, including people like International Gold Bullion Exchange that offered to buy and hold it for you, only to prove to be thieves, back in the 1980s. I think we need a higher standard to measure whether someone is a good dude. It like: When did sliced bread become a measure of technological innovation? Can’t we do better than that?
Excuse me, but the markets beckon.
Jeff
I’m just an old computer tech who operates on logic. It’s logical to me that after MF Global, Goldman Sachs shafting their clients, robo-signing scandal, etc, etc, and all they any of them have gotten is a slap on the wrist fine that is a very small percentage of the amount they "stole". The PM and securities markets are being manipulated and the government won’t do anything to stop it because it’s being done by Wall Street banks that own our politicians and regulators. That being said I enjoyed the comments and learned a bit from them.
Jeffrey, Thank you very much for taking the time here to describe an alternate explanation for Harvey’s observation about delayed deliveries… the devil is in the details as they say.
Although we (the CM.com community, with some help from me) ran an MMT true believer out of here about a month ago… I am really glad that we have been able to host this very touchy discussion in a constructive way… this would not be able to happen on the boards at TFMetalsreport, nor most other places where PM discussion happens. By saying this, I am not saying that I am now convinced manipulation does not happen… I have yet to see any reasonable explanation for the non-economic dumping of contracts that result in waterfall declines that happen so often in the PM markets, not seemingly tied to any news… I am though saying that my eyes have been opened to some of the complexities of these markets… and for that I am appreciative.
I must retract including Jim Sinclair in the list with Harvey Organ, GATA etc.
I know he does interviews with KWN, but I read this interview of him about gold and currency and in skimming eight pages he seems to give a lot of sensible answers without mentioning manipulation once. http://www.futuresmag.com/2012/05/01/jim-sinclair-has-something-to-say?page=4
Jim H: What’s MMT?
[quote=hucklejohn]Jim H: What’s MMT?
[/quote]
MMT = Modern Monetary Theory.
For a proper debunking of MMT, Please consider:
http://fofoa.blogspot.com/2011/11/moneyness.html
to all participating in the discussion - excellent thread, quite an eye opener to the metals markets.
Bron,
I actually struggle to understand why Sprott decided on a closed-end fund structure rather than an open-ended one due to the potential for premiums AND discounts
I think the answer is that he is the shark in the goldbug pond. He uses physical silver in his hdege fund in order to scalp the PSLV premium (in effect trading against the retail investors in PSLV):
http://kiddynamitesworld.com/pslv-sprott-files-to-sell-sold-to-you-sucka/
Sincerely,
Victor
[quote=CPTWaffle]
Yip, I used to believe the Ted Butler and GATA stuff. I used to believe the KWN posts from the "London Trader" but when I recently listened to an interview with Andrew Maguire at TFmetals I became convinced the "London Trader" is actually Andrew Maguire. They sound awfully similar, even using the same figures of speech. What set alarm bells off in my head is when he started suggesting that people who sign up for his services make sure they take a portion of their profits and buy physical silver, because only by taking physical delivery would they bring the Cartel to their knees! The emotive rhetoric, the talk of taking bringing down an Evil Cartel and the idea that a handful of mickey mouse retail futures traders would save the day made me realize I had heretofore been duped.
…
I still think it’s plausible that some central banks have an interest in seeing that the gold price behaves a certain way at certain times. If they do, to what extent it happens, I am not sure, but GATA, Jim Sinclair, Ted Butler, the "London Trader", Harvery Organ don’t have the answers. [/quote]
Excellent post, CPTWaffle. I want to first emphasize my own fallibility as I learned a little about the metals markets, and then see if I can persuade this group to revisit the discussion of Hoffer’s true believer.
To be clear, when I first started following metals markets a few years ago, I was just as convinced as some of you are by the Ted Butler, GATA, etc. story. It seemed to make logical sense to me, and boy was I ready to believe that the banksters were up to no good. The manipulation story seemed to make perfect sense, and when I first heard about GATA, my initial conclusion was that these were really fantastic people who were doing a good thing by standing up for justice and truth. It wasn’t until I really started to do my homework that I realized that all of GATA’s allegations were specious and that the GATA principals’ knowledge of the markets was actually shocklingly limited given their self-professed tenure in the business.
When I brought up Hoffer’s True Believer, it probably came across as "Hey, you guys are all a bunch of true believers but I know better! Neener neener neener!" That was absolutely not my intent. The reason that I think Hoffer’s true believer concept is so important is that it’s what helped me figure out how I was falling victim to my own fallibility. It taught me that because we live in a time when there is good reason to question whether governments and bankers are perpetrating crimes, many of us have become so disenchanted that we are hungry for an alternate explanation that makes sense.
We all saw what happened with the subprime fiasco, including the fact that nobody to this day has been investigated never mind prosecuted. The MF Global fiasco has proven to me that we no longer live under the rule of law. We live in a society where a privileged few - like Jon Corzine - are literally above the law. These people have literally bought the right to do as they please, and regulators and politicians are scared to mess with them. It’s a sad time in America, that’s for darned sure. What I realized is that this makes us feel so frustrated - so helpless as we witness crime after crime going unpunished - that we develop a very strong emotional reaction. As Hoffer described, feeling like we are part of something - a movement that is about truth and justice - satisfies our emotional need to cope with the very obvious decay in the moral fabric of our society and the rule of law. The reasons to be disenchanted are very, very real. Unfortunately, that makes us more susceptible to believing a story that resonates with our feelings of frustration, and makes us less likely to scrutinize the evidence.
As I’ve said all along, I continue to look for signs of manipulation, because I remain absolutely convinced that we live in a society where some people are able to purchase immunity from the law. The harder I look, the less certain I am about whether there is or isn’t manipulation going on in these markets. All I know for certain is that GATA, Butler, Organ, etc are peddling nonsense. That doesn’t mean there is no manipulation; it only means that the people who are making noise about it don’t know what they’re talking about.
All the best,
Erik
[quote=bronsuchecki]On discounts, one day when the bull market is over and everyone is exiting, I will not be surprised to see closed-end gold and silver funds trading at a discount - investors are reliant to some extent that the operators will step into the market to buy the shares to ensure a fair price.[/quote]Bron,
Given the redeemability clause and the law of efficient arbitrage, I don’t believe it’s possible for PSLV to trade at anything more than a very, very small discount to NAV (equivalent to the cost of arbitrage).
Am I missing something?
Thanks,
Erik
A couple of points.
This first one may sound strange to those of you who don’t know me. You should not assume that ‘the banksters’ are not up to tricks. They are. That’s what bankers, and others, do. It’s just not the tricks that GATA and those guys say they are. In that way, they are much more penny ante that the GATA boys would have you believe. In reality, they are much more smooth and successful, expressly because they do not go in for such large, unwieldy super manipulations. Bankers make their profits a penny or so at a time. They do so by overcharging half a percent or so on each of many trades. Don’t assume that because bankers do not engage in giant conspiracies they are angels.
Remember: I quit Goldman Sachs in 1986, in part because I did not like the way they treated clients, employees, and others. I think Bron pointed out last weekend that there is a rich published record of me being a critic, a vocal critic, of banks and banking regulators. I have been an outspoken advocate of proper regulation of OTC derivatives since I left Goldman, in June 1986.
Seond, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments may prove to be the downfall of silver. Remember: I am long silver, in contrast to all those inaccurate disparagements of me that have me an enemy of the metal. In fact, I was telling our clients back in the early 1990s that silver would rise sharply at some point in the distant future. But back to Sprott: Look at what his molybdenum specialty fund did to the molybdenum price, the equity prices of moly producers, and the investors in that fund, in 2008 and 2009. I think that is indicative of what could happen in silver. Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.
By the way, today is the 25th anniversay of a tremendous rout in silver. On 27 April 1987 silver started the day around $9. It had been $5.25 - $5.50 in December 1986, when we issued a buy recommendation on silver. On 27 April it went from around $9 at the opening in Europe to around $11.25, and then down to $7.20, all in a day. The trading was so fierce that Comex had to close for a few days to match and settle all of the trades.
A couple of points.
This first one may sound strange to those of you who don’t know me. You should not assume that ‘the banksters’ are not up to tricks. They are. That’s what bankers, and others, do. It’s just not the tricks that GATA and those guys say they are. In that way, they are much more penny ante that the GATA boys would have you believe. In reality, they are much more smooth and successful, expressly because they do not go in for such large, unwieldy super manipulations. Bankers make their profits a penny or so at a time. They do so by overcharging half a percent or so on each of many trades. Don’t assume that because bankers do not engage in giant conspiracies they are angels.
Remember: I quit Goldman Sachs in 1986, in part because I did not like the way they treated clients, employees, and others. I think Bron pointed out last weekend that there is a rich published record of me being a critic, a vocal critic, of banks and banking regulators. I have been an outspoken advocate of proper regulation of OTC derivatives since I left Goldman, in June 1986.
Seond, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments may prove to be the downfall of silver. Remember: I am long silver, in contrast to all those inaccurate disparagements of me that have me an enemy of the metal. In fact, I was telling our clients back in the early 1990s that silver would rise sharply at some point in the distant future. But back to Sprott: Look at what his molybdenum specialty fund did to the molybdenum price, the equity prices of moly producers, and the investors in that fund, in 2008 and 2009. I think that is indicative of what could happen in silver. Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.
By the way, today is the 25th anniversay of a tremendous rout in silver. On 27 April 1987 silver started the day around $9. It had been $5.25 - $5.50 in December 1986, when we issued a buy recommendation on silver. On 27 April it went from around $9 at the opening in Europe to around $11.25, and then down to $7.20, all in a day. The trading was so fierce that Comex had to close for a few days to match and settle all of the trades.
[quote=Erik T.]We all saw what happened with the subprime fiasco, including the fact that nobody to this day has been investigated never mind prosecuted. The MF Global fiasco has proven to me that we no longer live under the rule of law. We live in a society where a privileged few - like Jon Corzine - are literally above the law. These people have literally bought the right to do as they please, and regulators and politicians are scared to mess with them. It’s a sad time in America, that’s for darned sure. What I realized is that this makes us feel so frustrated - so helpless as we witness crime after crime going unpunished - that we develop a very strong emotional reaction. As Hoffer described, feeling like we are part of something - a movement that is about truth and justice - satisfies our emotional need to cope with the very obvious decay in the moral fabric of our society and the rule of law. The reasons to be disenchanted are very, very real. Unfortunately, that makes us more susceptible to believing a story that resonates with our feelings of frustration, and makes us less likely to scrutinize the evidence.
[/quote]
Erik T,
Excellent points. Daniel Kahneman talks about this fallibility in his recent book, Thinking fast and slow.
We’re all composed of 2 systems.
System 1 - fast, intuitive, and emotional
System 2 - slower, more deliberative, and more logical
Most of the time, these 2 systems work in harmony so things are okay. But there are times when a person can utterly surrender to System 1, therefore failing to apply logical coherence to their thoughts.
[quote=MetalsFacts]
Second, Victor, I must get to know you better. You have said many spot on things. I happen to believe that the Sprott silver investments mayprove to be the downfall of silver. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.
[/quote]
Jeff,
You may have read this already, but in case you haven’t: Antal Fekete wrote a nice article on Sprott’s funds and silver volatility.
http://professorfekete.com/articles/AEF140YearsOfSilverVolatility.pdf
I quote from his article:
Beware of the fund manager, crying from his rooftop that the paper silver market is a joke, while down there under the roof he is selling paper silver at a 25% mark-up.
Victor is quite the cleaner 
His write-up on Why Credit suppresses the gold price is spot-on.
Jeffrey, I have to question a few points you made regarding Sprott funds… first, the existence of Sprott funds in Moly… why would you attribute causality to the existence of these funds at a time when markets of all kinds were dumping left and right? Secondly, I don’t understand your point,
Sprott has amassed an enormous position in physical silver and in most Canadian listed silver mining companies. When investors grow tired of his funds and start to liquidate, Sprott will be in a mechanical position in which it will have to dump silver and silver stocks. This could trigger a massive liquidation.Sprott Silver holds ~ 33M ounces... roughly the same ballpark as the deliverable portion of the Comex inventory.... which Gold and Silver bugs almost universally agree would be wiped out in a flash if/when the monetary SHTF... since it is only $1B worth of stuff. That is a pittance these days. I almost have $1B myself.. but I am saving it for some home improvements : ) Also for context, remember that total yearly Silver mining brings 750 - 800M new ounces out of the ground... so to my mind... your point about the possible effect of 33M ounces on the markets is overblown.. and I don't even understand why the existence of the Sprott fund would drive liquidation, any more than any other holders of Silver.. I certainly understand how lots of people who own PSLV could lose money in a diving Silver market.. but you seem to be suggesting that PSLV could go somehow bidless in a way that would drive liduidation.. .what are you talking about? Thanks, Jim
I’d like to offer a few more observations, in hopes they might shed more light on why I am so convinced this is a psychological phenomenon.
Most humans develop an emotional connection to people they respect and whose actions seem to be aligned with the public good. We’re also prone to becoming defensive and emotional if our "heroes" are tainted by others. When I first learned of the existence of GATA, I most definitely considered the principals to be heroes. Hard-working guys volunteering their time to work tirelessly to expose the evil-doing banksters - who could argue with that! And when I did more research and started to uncover overwhelming evidence rebuffing all their arguments, I was slow to believe it because doing so interfered with my emotional desire to keep my heroes up on a pedastal. Eventually, fact overcame rhetoric, and I figured it out.
Now consider this discussion thread. It began when I observed that Harvey didn’t back any of his arguments with factual substantiation or even logical argument, and I debunked some eggregious factual inaccuracies in what he said, such as the nonsense about it being illegal for the futures market to set metal prices because they are only supposed to "discover" the price.
Now consider the response. Did anyone call foul on my reasoning, and say "Hey, this price discovery thing (or anything else I brought up) really is an issue and here’s why…"? No. Over 120 posts and so far nobody has offered any logical argument to rebuff the substance of what I said. One poster instantly came to Harvey’s defense, citing Harvey’s passion, dedication, and work ethic. But nobody was questioning Harvery’s passion or dedication - the point was that everything he says is nonsense. The barrage of posts coming to Harvey, Ted and GATA’s defense was overwhelming. I was immediately accused of making ad hominem attacks on the personalities involved, when I had done no such thing. Even after I quoted the Dictionary.com definition of the word charlatan, several people said they didn’t care what the word actually means - they still find it insulting and rude that I have (correctly, I would point out) labeled these people with that term. The minor detail that I backed my statement with facts and well-reasoned arguments didn’t matter.
We’ve had quite a bit of very informed technical discussion in this thread. I learned how the real-time quote system for the OTC market works, and we discussed the GLD Puke theory, as well as several other very fascinating technical discussions. Victor not only impressed most of us site regulars with his knowledge, but even impressed Jeff Christian to the point he said so publically. Yet so far, 120 posts later, nobody has even tried to argue that Harvey/Ted’s price discovery argument makes sense, or that the ratio of paper to physical transactions has anything to do with leverage, or anything else related to the actual debunking of the arguments posed by Harvey, Ted, and GATA.
And let’s face it: I’ve offended several people here by being so outspoken with my own viewpoint. One would think that everyone who took offesne would be just itching to put me in my place by posting a well-reasoned argument for why the price discovery or leverage arguments really are legit, and why I’m wrong. But nobody has even tried to do so, 120 posts pater. One would think that Ted and Harvey (both aware of this thread because I e-mailed them the link) would be anxious to rip me to shreds by posting a well-reasoned argument defending their views, and showing me up as the Charlatan. Yet neither are willing to participate in the thread! In Ted’s case, he sent me an angry reply telling me I should attack the message, not the messenger. In reality I had attacked his message (example: price discovery), and had not attacked the messenger in any way, other than correctly using the word charlatan to describe him. I even came to his defense in a very small way, by telling Jeff Christian that I think he’s wrong to question Ted’s sincerity, and saying emphatically that I’m convinced Ted believes every word he writes. Why would Ted ignore the substantive argument (about the message), and perceive nothing but a personal attack on himself?
I ask everyone to pretend you are looking in on this situation from outside, and have to choose from two possible explanations. One possibility is that I’m wrong and Harvey and Ted and GATA are right, but for some strange reason, despite the number of people who took offense at my argument, nobody has offered a retort of any kind against the substantive arguments I made. The other possibility is that a lot of people here have come to see these people as heroes who are working tirelessly to combat the evil fraud we all know exists. When our heroes are attacked, we tend to react from the strong emotion of loyalty, defending the people we look up to, by citing their legitimate merits (such as Harvey’s indisputable passion and work ethic), while somehow ignoring the well-reasond, factual arguments proving that our heroes really are charlatans afterall.
One poster felt the need to go out of their way to emphasize that they didn’t need me to teach them how to think critically. Was it really the case (as it appeared on the surface) that they found my passionate focus on the facts, logic, and reason, admittedly tainted with an aggressive tone, to be so horribly offensive that they felt it worth posting a reply just to make it clear they didn’t want my help seeing the truly pertinent facts? Or is it possible that because I was aggressively discrediting someone they viewed as a hero, an unconscious emotional reaction was triggered, causing them to need to find a rationalization to justify not listening to anything further from me, because I am the person who is threatening a well-entrenched wordview they have strong emotional investment in? Which explanation seems to make more sense?
Bottom line, there are still several people here who think I’m the big jerk on this thread. What I don’t understand is, why don’t you guys just put me in my place by explaining why Ted and Harvey’s price discovery argument really does make sense, or why the ratio of paper to physical transactions on LBMA has anything to do with leverage? I mean, if you did that, I’d really look like an idiot and we could all move on. But not only has nobody offered a persuasive argument proving I’m wrong - nobody has even tried.
I submit that what’s really going on here is that a whole lot of you are rightfully outraged at the corruption, cronyism, and fraud that has taken over the financial system. You can’t do anything to fix it personally, and that really stinks. But you have mentally associated certain names and organizations with "the good fight" to expose fraud and injustice, which seems like about the most noble thing anyone could do. Then some guy (me) comes along and rains on the parade, pointing out that the people you’ve been viewing as heroes of the good fight don’t actually know what they are talking about, and supporting those contentions with irrefutable facts and well-reasoned logical argument. But I’ve offended your heroes, and have therefore offended you. I contend that’s why you guys are all so quick to come to Harvey and Ted’s defense by attesting to their character, passion, etc. without even attempting to rebuff the substantive arguments I’ve made showing them up as charlatans.
I too wish that we had people doing what GATA, Ted and Harvey falsely believe themselves to be doing. But unfortunately, the evidence overwhelmingly suggests that these guys, while perhaps well-meaning, are just talking nonsense.
All the best,
Erik