05 June 2011

Lies leave traces behind

A quote from the latest Mike Krieger article: "For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying."

This quote appeals to me because I see this happening often in the internet precious metals community. I see many untruths starting out and propagating and even if they are "nailed down" they still leave a feeling of distrust. I am of course speaking of the Perth Mint here, but there are many other beliefs about the precious metal markets that behave like this. These untruths also resurface again and again, thanks to precious metal newbies who fall upon old webpages, which gives them life all over again.

These untruths fall into two categories: a) Lies, which I classify as those put out by people knowing them to be false; and b) Misunderstandings or Misinterpretations, which are put out by well-meaning people unknowledgeable in the subtleties of the precious metals markets. Why these untruths appeal and resist refutation is best explained by the following text, which prefaced the quote above:

"... in the big lie there is always a certain force of credibility ... and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie ... It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation."

I should point out that the quotes are not Mike Krieger's. Mike was merely quoting from Adolf Hitler's Mein Kampf.


  1. "One of the most striking differences between a cat and a lie is that a cat has only nine lives." -- Mark Twain

    Are there any examples you'd care to discuss?

  2. Its a bit frustrating to me that you and some other valuable PM sources get caught up in the unimportant drama between blogs.

  3. Not sure I agree, Robert. It is important to have a gauge on which sites to trust and which are scaremongering or selling their book. Bron has some expertise here that, like Anon above, I would appreciate him sharing.

    Maybe it's too much to ask you to spell out which sites you consider falling into the latter category, Bron (although Dave from Denver springs to mind), but perhaps you could list a few that you like? I would be very interested in hearing your opinion on Jesse's Cafe Americain, KWN, Jim Sinclair's Mine Set and many more. Even if you just list the one's you like (FOFOA for one I guess) that would be a great service.

  4. The key objective of this blog is to counter untruths. As to naming names, the ultracrepediarian link has most of them.

    I default to the assumption that commentators are not lying but are just making interpretation mistakes or lack additional information.

    I have some suspicions as to those I think deliberately lie and are pumpers, but I'm not prepared to name them until I have a strong case and a lot of evidence - consistent examples.

    Robert, I hope I tend not to get too "dramatic" on minor issues and stick to factual inaccuracies, but I do think untruths are important to counter.

  5. See these quotes from http://www.321gold.com/editorials/anonymous/anonymous052011.html

    All these people make their living and their fortunes based on a silver boom. While much of their thoughts are constructive and informative, one has to be careful basing one's investment choices on the comments and perspective of those who profit from increased buying participation.

    As silver becomes "an industry", they are merely "the new boss", seeking their turn at maximum gain. It's just "their thing", and they're going to promote the shit out of it no matter what.

    But I also realize the need to "think for one's self " and not become part of a herd - even an "anti-establishment" herd.

  6. I think this is one of the big issues in PM's and it exists IMO because of the lack of transparency. I read PM sites for a year, and as many PM news stories as I could just to get educated in the topic, and I have a list that I either disregard totally, and some I read with caution. Many of the high emotion sites can be disregarded IMO.

    I think there are some liars, but a bigger percentage of people who are just repeating what they've heard, and it becomes a truth in their minds. Lots of dis-information in this space. Once I can verify dis-information I disregard the site or blogger.

    Anyway, I continue my education doubting most of what I read. PM's are so opaque, and unless you're been in the industry it's not easy to be an expert in a part of the puzzle. I trust what Bron's saying.

  7. Robert -
    I can't believe you classify it as "drama" between blogs... it's misinformation on a MASSIVE scale - and it spreads like herpes at a free love party.

    I read something about the JS Kim piece on Sunday. I immediately lamented to Bron and others (And posted it in Yukon's comments) that you could bet your bottom dollar that every silver blog would be ranting about it today, despite the fact that almost everything he has to say about EFPs is either 1) flat out false or 2) the result of data that he misread , miscalculated, and misinterpreted. Of course, the conclusions drawn by others from Kim's misinterpretations are also worthless - they are, literally, fantasies based on bad information.

    The problem is that I don't think there's a single voice in the silver market who even understands this - you can't expect the kind of people who bury silver in PVC pipes in their backyard to understand an EFP - even though it's an amazingly simple transaction.

    So where does that leave us? Am I really the only person on the internet who cares enough to debunk this crap? You know what? the misinformation spreads so virally and so viciously, that I don't give a shit anymore - I'm not wasting my summer trying to re-educate people.

    People will make trades based on bad information, and they are destined to get destroyed in the end.

    Of course, then they'll just blame Blythe and the Banksters - when it was their own information sources that were the problem all along.

  8. There's a quiet but very real set of people who are hungry for good information, seek it out, and appreciate it when they find it. Your efforts will do good, even if it's hard to see the results as noisy people continue being noisy.

  9. KidDynamite,
    Please read the following 3pg article from ICE futures Europe and you will see that JS Kim is right again and you're wrong again! https://www.theice.com/publicdocs/futures/ICE_Brent_EFP_Explained.pdf

    In this article, you can imply that JP Morgue is dumping their SLV share exchange for silver future long contracts in order to rescue COMEX and also suppress the price of silver by creating the illusion that is no shortage of silver. The truth is that JP morgue and the likes are bleeding silver and gold(ie SLV & GLD).

    Hope you can figure out your own misconceptions.

    Dirty Deeds Done Dirt Cheap (D4C)

  10. Ronnie - Please.. read your own article. Everything I told you in the ZH thread is 100% correct, and JS Kim is absolutely wrong about EFPs.

    I am willing to bet that I am the only person reading ANY of these threads on ANY of these blogs who has actually done an EFP.

    Since you seem confused by the ICE article's use of the term "used to price physical crude oil," let me explain it to you one more time: it's a BASIS trade. that's it. nothing more. There is no market impact.

    now, there is an actively traded market in the EFP, and if someone were to go and whack every bid or lift every offer, the price of the EFP may move, but all that does, if it's done to "manipulate" prices, is lock in losses for the manipulator.

    This is a forum for intelligence and reality - please take your confusion elsewhere, or ask questions politely and they will be answered.

    anyway, wtf are you trying to say? You think that JPM is EFP'ing out of SLV and into COMEX futures? SO WHAT? that has no impact on anything. I hate to break it to you. You know why? because the COMEX participants know that SLV has silver - that's why they view the two as equivalent. ALternatively, JPM could just redeem SLV for silver and deliver it into their short position. But what you, and others fail to understand, is that the COMEX longs don't want the silver! so they EFP out of their position, contra JPM.

    class dismissed.

    be more polite next time, or I won't explain it to you

  11. KidDynamite,
    How the f... am I not polite by using the same words you used on your blog and ZH? And secondly, I didn't say you were wrong technically(in fact I do appreciate your technical education). All I'm saying is that JP morgue is dumping their own physical silver onto the market in exchange for fractional reserve futures contracts(ie exchange real tangible goods for pieces of paper). The implied question(in case you still don't get) is that how much longer can it last? The reality is that JP morgue and the likes are bleeding REAL silver and gold (I'm not saying SLV and GLD don't have real gold backing), and there must be a time when they run out of physical metals. By then physical demand will determine the market instead of the COMEX because it will default by then.



  12. Hey KidD,

    Keep up the education for those of us that really appreciate any thread of truth.

  13. KidDynamite,
    BTW, I do appreciate you exposing Eric Sprott selling his PSLV holdings. Ok, we now know that he's not a Saint but he ain't a bad person either. What he's been saying about the market is still holds. Yes, you understand a lot more about finance than most of the silver fanatics out here, but I don't think you fully appreciate the flawed nature of factional reserve system.
    I take back my words that I've offended you with. But I wish you wouldn't use the same words on other ppl even if they're less educated about the financial market, bacause the fundamentals are based on the economics and not on finance.


  14. Ronnie - you wrote:
    "you will see that JS Kim is right again and you're wrong again!"

    and then you wrote:

    "I didn't say you were wrong technically"

    I take offense when I spend my time trying to explain something that I'm knowledgeable about to people who know nothing about it, and they reply "YOU'RE WRONG." That's what I meant about you not being polite - apologies for escalating it - my fault.

    I'm sure you can understand the frustration I face in dealing with the Silver Comment Thread Mafia, who constantly repeats incorrect stuff that they've read, even as I try to tell them the reality of the situation.

    By all means - I would love for you or anyone else to tell my WHY you think I'm wrong about any word I've written about EFPs with respect to JS Kim's piece.

    to your point about running out of silver: as long as there are 350mm ounces of silver in SLV no one is running out of silver. That's what the silver bugs don't seem to understand - COMEX is not the big boy in the visible supply market anymore: SLV is.

  15. Dynamite,

    Look how worked up you are.

    You made your point and people who listen will continue to listen and those who don't will listen later or they'll be out of the game.

    Now you don't want to blog about silver anymore because of a herpes breakout. Wear a condom and avoid gangbangs.

  16. Or abstain all together like you said.

  17. I'm a person who wants real information but gets confused trying to learn things from Internet sources of unknown quality.

    Online definitions of Exchange for Physical flatly contradict each other. Specifically they contradict each other about whether an EFP involves the physical commodity.

    Is the name misleading? Is it, as the majority of sources say, a way of closing out a position outside the trading floor by having one side of the trade sell their contracts to the other side, which then nets them to zero?

    If so, what if anything is the significance of using ETFs to settle? Are they being used in place of cash, or in place of warehouse receipts?

    Where are the good sources of information for questions like these?

  18. This is probably the best explanation of EFPs I've found http://silveraxis.com/todayinsilver/2009/07/30/exchange-of-futures-for-physical-efp-explained-part-one/

    Finance/Treasury types use the word "physical" in a different sense to common usage. For example, they would consider buying a stock and getting a certificate as a physical, even though you would still consider that a paper asset.

    An EFP is really just a swap, I'll take on your futures contract and give you something else. What that something else is could be real physical commodity or whatever other asset the exchange allows.

  19. So, checking my understanding:

    ETFs in EFPs have nothing to do with anyone getting shares palmed off on them when they wanted bars. Unlike delivery, which is a contractual obligation, EFPs happen only when both parties opt for them.

    Have I got it right?

    Next one: does it even make sense, let alone being true, that a seller would pay an 80% premium to avoid delivering metal? (http://forums.silverseek.com/showthread.php?38339-80-Premium-Paid-on-COMEX-Silver-to-Avert-Delivery). Just as a matter of logic, wouldn't a short without metal have bought an offsetting long contract before delivery time?

    Bron, would you consider an open Q&A thread, or would it just get clogged up with nonsense?

  20. Yes, EFPs are a mutually agreed swap.

    Your logic is correct, which is why these cash premiums to not take physical delivery are bogus. And even if it was true, Perth Mint would be happy to sell 1000oz bars at 1% premium which they could use to make delivery - no need to pay 80%.

  21. Don't sweat it KD, ZeroHedge has some interesting stuff but plenty of baloney as well.

    I accused them of being disinformation agents once when they were posting some of the crap about Gadaffi massacring people from jet planes. They didn't like it.

    They just pick up stuff from elsewhere like most other websites.