Is someone paying Zero Hedge to post propaganda?

They’re back! Many of us thought that with all the hype and misinformation spread around the Internet early last year on silver being thoroughly exposed as pure nonsense, the discussion on precious metals markets would return to common sense. Seems like it has been a long time since we heard talk of 80% premiums to cash settle on Comex, silver coin dealer inventories being wiped out, panic in the halls of Comex due to impending collapse, midnight meetings by the Cartel, the Pan Asian Gold Exchange to crush the Cartel, a run on Comex inventories, secret derivative liabilities that would bankrupt JP Morgan and viral videos of talking flatulent bears (I’m sure I’m still missing a few). But unfortunately, that doesn’t appear to be the case.
ZeroHedge, perhaps the greatest merchant of misinformation on silver in the world is at it again with a post today entitled “Physical Silver Surges to Record 30% Premium over Spot, In Backwardation”. As one who deals in precious metals on a day-to-day basis, that was news to me. Today I was seeing 100oz bars trading for less than 4% over spot, maple leaf and phils for 8.5% over and eagles for 11%. That’s retail - size transactions would be at a discount to those prices. If one were interested in junk or scrap silver, the price would be even less. Silverware can be had at spot and junk silver coins at slightly under spot - all at any size. Likewise, exchanges for physical (EFP) can be had at a slight DISCOUNT. That is, one could trade their futures for physical at a price lower than contract.
So where’s the 30% premium for physical? Oh, it’s not physical at all. It’s the premium to NAV for Sprott’s silver ETF! From the post:
And for a good sense of what the “real” price of the metal is, not one determined by institutions whose interest it is to preserve the hegemony of paper, one can either try to procure gold and silver at a retail merchant, or one can look to the premium of a dedicated physical ETF over spot. Such as Eric Sprott’s PSLV which as of today is trading at an all time high premium of 30%! In other words, someone is willing to pay up to 30% over spot for the right to be closer to the physical metal than merely have a paper claim on a paper claim (pre hyper rehypothecation and what not).
How is that physical? An ETF is a stock. It’s a piece of paper that says you own an interest in an entity that owns some physical silver. That paper can be borrowed, lent, hypothecated and re-hypothecated a million times, just like any other stock. So in ZH land, physical isn’t physical, paper is physical. Not all paper, only paper issued by one entity - Sprott. Coins aren’t physical, bars aren’t physical, silverware isn’t physical - the only physical silver in ZH’s mind is the Sprott ETF. (Sure, ZH did note something about "coins" above but obviously did not inquire with any physical dealers).
I’ve wondered for a long time how ZeroHedge can continue to produce articles on gold and silver that are so wrong on so many levels. Tyler Durden is an intelligent person, who surely has the capability of reporting responsibly on issues impacting precious metals industry. But he still posts misinformation such as the above on a regular basis. Does he care about his credibility? Is he just trolling for clicks? Or perhaps is he just being paid to post such articles? Are entities such as Casey, Sprott, GATA etc, giving ZeroHedge money for propaganda?
Enquiring minds want to know.

109 comments:

Kid Dynamite said...

just another clue for the silverbugs that they are being misled. When someone posts something so blatantly erroneous as the ZH article, it's a free sign for their readers that the author isn't a good source of reality based information.

amazingly, this time, there were a few handfuls of commenters on the ZH post who noticed the idiocy.... and several handfuls who didn't.

for those that still don't understand, this commenter said it succinctly:

"Lot of confusion on this topic. Fact is, PSLV is a closed end ETF. As such, no new shares can be created and there is no way to arb discrepancies between market price and NAV. That is the only reason for this high premium."

if you still don't understand and really want to, I have written about 2 dozen articles on this topic. free for all to read.

GM Jenkins said...

I noticed this apparent contradiction in that post:

part 1:
" like back then, so now there is an actual shortage, manifesting itself in the premium. And while last time its was the price plunge which eased supply needs,"

part 2:
"In the past (think fall 2010 through spring 2011), [it was] sharply rising prices which coax[ed] fresh metal out of hiding."

well which is it? Maybe I'm missing something.

GM Jenkins said...

the Pan Asian Gold Exchange to crush the Cartel,

Can you explain why this qualifies as "nonsense" (on par with the blatantly fradulent claims of 80% premiums, for exmaple) ? The arguments I've heard (sorry no links) regarding leverage in the COMEX vs none in the Pan Asian seem credible.

Brian O'Flanagan said...

the comments on the ZH thread are priceless. Max Fischer is pointing out the truth and all they want to do is call him a troll. Even the great Turd steps in and argues that orders over $1 million go at 30% over. Absolute bullshit. The more you buy in the wholesale market, the LOWER your premium - at least that's how it is in the real world.

@GM, Bron covered the PAGE issue. Due to new PBoC crackdowns, PAGE is dead and its status as savior to the anti-Cartel forces was overhyped to say the least.

Brian O'Flanagan said...

I'm sure Max Fischer is going to be banned from ZH, just like I was. The truth is the enemy of propagandists like ZH.

Warren James said...

re: internet clues, they are many and scattered, making it difficult to prove anything definitive. A quick check shows that zerohedge.com is registered to an 'EASYDNS TECHNOLOGIES', distinctive only because it is based in Toronto, Canada (which according to our last batch of research, is also where Mr Albert Dalal resides - famous for his connections with SilverGoldSilver).

Internet 'trails' often end where they start - i.e. though interesting, the 'Canada' correlation means very little. For example, I myself registered a domain name via Canada a few years ago simply because it was the cheapest option, anyone can do the same, from any part of the globe.


Martin Armstrong's words on silver are always a little disturbing, notwithstanding his disdain of silver, his highlighted words are Brian's opening sentence here - you will find some resonance.

"...The Hunts were buying silver from the late 1960s. I knew of them for a decade before 1980. All of a sudden, within weeks of the high, their name became a household word. That was the market manipulators who rolled them out to suck every last investment dollar into buying silver at $54 they could gather with the slogan it was headed to $100 and touting the silver/gold ratio used to be 16:1 and that is where it would return. Then they rigged the exchange and it became twice the margin to be long vs. short. They pulled every trick in the book to screw the average investor. Because I was warning clients "they're back" and were going to manipulate silver from $4 to $7 and then crash it, they used a bought and paid for analyst of PhiBro to call the wall Street Journal to spin the story ...
..."


from (Gold-123011.pdf) - typos corrected by me.

Brian O'Flanagan said...

That's interesting, Warren. One could theorize that ZeroHedge, Sprott, Harvey, GATA, Jesse, Turd, SGS and all the other silver pumpers are all part of a manipulation scheme in some way. They talk a lot about alleged Cartel schemes trying to keep the price low, but they themselves may be part of moneyed interests initiating a massive pump and dump scheme. How else can one explain their willingness to write complete lies and misinformation without regard to their reputations? Perhaps a little payola?

Warren James said...

Hi Brian, agreed in principle that your named collective have a net effect on price movement, and that the 'who gets paid' question would indeed hold the final answer. Your list would have to be separated out - it's not fair to tar them all with the same brush: some of these guys are driven in part by their personal convictions, and in addition, the motivations for various individuals will change and shift over time.

Bron touched on a theoretical exploration of categorization: "Classification matrix for PM blogs". I think the classification has to be done at a post-by-post level to be meaningful, but it's a good start in the (currently-non-existent) science of blog examination.

Having said all this, the ratio of canada-based-connections-to-silver-spruikers is particularly high. If I were looking for a 'nest', that is where I would start.

Brian O'Flanagan said...

Agreed Warren, there definitely appears to be a Canadian connection to all this. If not Sprott (or in additition to Sprott), perhaps it is Canadian mining interests looking to drum up hype for their products and their stock prices.

Kid Dynamite said...

Brian - this was my point in the prior thread about the hype being necessary to fuel silver investment demand, and drum up demand to fill the supply surplus.

Bron said...

I have no doubt that ZH takes money to run content, it is very clear to me watching them for a number of years that the posts used to be more authentic but now the number of repost type where they just word for word copies of the source content with little editorial has increased.

The pattern of the way this content is run looks very much like advertising campaigns - eg high intensity/high spend to get brand recognition then decrease frequency just enough to maintain top of mind.

I'm sure if an analysis was done of ZH post frequencies you'd see certain business being posted a lot when first featured then either drops down or drops completely off (once they have got the click throughs to their website from ZH).

I think this change occurred when Marla and the other avatars left. My current theory is that ZH started off legitimate/idealistic idea among some financial market friends but a split occurred when Tyler wanted to commercialise the large number of eyeballs they were getting.

Interesting also to analyse the move to promoting precious metals, which they never really had much of an interest or opinion in. Alternative theory is that they were bought out by commercial interests who took over the shell and now use it to pump PMs and just run other financial content to maintain credibility.

Hey, this make up your own conspiracy theory stuff is fun.

Bron said...

Where does Turd get his info "that orders over $1 million go at 30% over"?

Why aren't any of these desperate buyers coming to the Perth Mint? We'd make an absolute fortune selling 1000oz bars at 30%. Hey, I'm sure our Treasurer will do deals at 25%, you can save 5%!

Jeanne d'Arc said...

KD raised the issue of ZH's domain here. Further to this, and Warren's post above, I can confirm that I looked into this issue last summer.

Although the Whois.net data is now sparse to say the least, ZH was less bashful last year. Indeed, the administrator was listed as one Ryan Larson. Now, this could of course be any old Ryan Larson, of which there are probably hundreds. Some spotty geek web designer, perhaps.

However, it is quite curious that the one Ryan Larson that I do know of is currently Head of Equity Trading at RBC and thus the principal underwriter of PSLV. Curious. Even more curious is that ZH changed the name of their administrator just after the PSLV launch. A cheeky 'nod and a wink', perhaps...? Or just a striking coincidence?

What is well established, however, is that the original 'Tyler Durden' is one Daniel Ivandjiiski, a former trader who was barred in 2008 by FINRA for insider trading (an open-and-shut case). Since then, the 'Tyler Durden' moniker has expanded to include several, perhaps tens of, other contributors, which is evident by the volume of articles published under the same name daily. Ivandjiiski is still very much at the forefront of the site, however, and the vision and tone of ZH is all his...

Finally, I think my bears article (thanks for the hat tip, Warren!) established pretty clearly that ZH had unethically promoted a private business (i.e. the silvergoldsilver online store, now closed). And the relationship between ZH and SGS (and the makers of the bears videos, whoever that might be (but it certainly ain't SGS...)) is far from transparent. Albert Dalal was heavily involved in the SGS site, although at least one other individual also supplies content. Dalal's Byzantine and unorthodox business dealings were also dealt with in the bears article.

Jeanne d'Arc said...

And on the Sprott connection: Warren, do you remember back in the good old days, when you wheedled a confession out of Trinity B? You were kind enough to let me have sight of a 'test article' by her which you'd commissioned to draw her out. Although TB later admitted it was pure fiction, I do recall that the basic thesis was quite striking.

I wonder if it might be worth putting the thrust of it out on Screwtapes (albeit with a very heavy caveat that this was a satirical piece of work, with no supporting evidence, as admitted by the author)? Your call...

Warren James said...

JdA, yes with all the silver hype seemingly restarting, that article is a good one to put on display instead of being packed away in the box. (it was the best Benton theory ever put forward). I'll send it to you again, we can write up a preface/caveat on it.

Brian O'Flanagan said...

@ Bron "Hey, this make up your own conspiracy theory stuff is fun". Indeed, about 99% of the things you hear from the silver propagandists is completely made up, yet if repeated enough times it is accepted as fact.

Did you know that I heard that the propaganda cartel (ZH, Sprott, GATA, and the others) held an emergency meeting over the New Years weekend? They were panicking about the plunging price of silver and the collapsing stock prices of the miners. The Cartel decided they must do everything in their power to stop this decline! ZH was ordered to restart its propaganda pieces while Sprott would call on his soldiers to drive up the PSLV premium. GATA will come out shortly with some bombshell allegations and Harvey will report on massive losses of Comex inventories. Once the price starts moving higher, Kaiser will declare the bankers are on the run and that if the public purchased just one more silver dollar, the price of silver will skyrocket to $16,000!

At least, that's what I heard.

apberusdisvet said...

When you cut through all the noise, the reality of silver is that it is a declining resource on the planet even as more uses for its unique qualities are being discovered on a daily basis. According to the USGS, all known reserves could be exhausted within 20 years. There is no current surplus of physical silver. The "claimed" surplus includes all bullion coins minted and sold to investors over the past decade; these will only hit the market at much higher prices.

The Mad Ape said...

PSLV is backed by audited silver bullion in storage at the Royal Canadian Mint.

SLV is a fraud. Nothing but paper backed by BS, propaganda, and deception. The COMEX is a criminal enterprise. Corzine should be executed and MF Global is the beginning of the end game to a bank holiday and a new currency.

The premium on PSLV was not caused by average Joes doing day trades. This is an institutional push because the premium will seem like a bargain when the dollar is rendered worthless.

Gloeschi said...

Still doesn't explain why people pay 32% premium over NAV for PSLV (which is not an ETF, by the way. It's a trust). You can exchange your Trust shares for physical silver.
Also doesn't explain why sales at the US mint increased 5-fold for gold and 9-fold for silver in the first days of January compared to daily run rate in December of 2011.

Brian O'Flanagan said...

The only explanation for the PSLV premium is either mass investor stupidity or manipulation on the part of Sprott and his silver warriors. One could buy all the physical silver they want for at or a small premium to spot, why pay 30% more for a paper instrument? If one were to sell their PSLV shares and use the proceeds to buy Silver Eagles, they'd get 30% more silver then they had with PSLV!

Kid Dynamite said...

The explanation for why people pay 30% over NAV for PSLV is simple: fear and ignorance, which is driven by the nonsensical lies repeated ad nauseam as in the ZeroHedge post in question on this thread (ie, paper vs physical price disconnect (FALSE), etc), and typified perfectly in The Mad Ape's "SLV is a fraud" comment just above, which regurgitates the lies that the Silver Mafia repeat continually.

The explanation for why the premium stays high is that the Misinformation Mafia is working relentlessly, repeating lies under the Internet Law of "If You Repeat It, It Makes It More True," and misinforming more and more suckers everyday. Recruiting more idiots to the Ponzi Scheme of "believing the crap we're pushing on you," and keeping the game going.

there's nothing any of us sane people can do about the mispricing. No arbitrage mechanism, and no borrow available to short shares.

Gloeschi said...

Mass stupidity: not impossible. However: wouldn't a stupid person not rather purchase SLV at slight discount to NAV than PSLV at 32% premium ("Stupid" as in not putting much thinking into one's investment decision).
Manipulation: would require constant purchasing of PSLV at vastly inflated values. Not impossible (the SNB does it with Euros), but what would be the motivation behind that? And the exit strategy for all those PSLV's?
You could also say SLV is a market manipulator. Assuming the claims will never be honored, every investor buying SLV is one investor less buying physical. SLV can be created - physical not.
The daily run rate of Gold Eagle sales at the US Mint in January is at 12,500 ounces up from 2,100 in December (6-fold); the one for Silver at 500,000, up from 64,000 (8-fold). The skeptics will probably explain those buyers as fools, too.
This reminds me of the joke of a guy driving on a highway, hearing a warning about a wrong-way driver, thinking to himself "One? Hundreds!"

Brian O'Flanagan said...

Well, let's just say that people buying silver eagles are at least 30% smarter than those buying PSLV. I think we can all agree to that.

Kid Dynamite said...

@Gloeshi- "However: wouldn't a stupid person not rather purchase SLV at slight discount to NAV than PSLV at 32% premium "

first, SLV doesn't trade at a slight discount to NAV. it trades right in line with its NAV, because there is a mechanism (creation/redemption) to ensure that variations can be arbed.

It is my opinion that every PSLV shareholder would be much better off in the long run if they were long SLV instead. It's taking longer than I thought for PSLV's premium to "come to its senses," but it will happen eventually. Some PSLV holders will make money buying at a high premium and selling at a higher premium, but most will get buried, and get a rude awakening when Sprott finally saturates the market with new shares and the premium comes back to reality.

What's even more amazing is that the PM community had this EXACT same discussion about PHYS/GLD back in early 2010 when PHYS traded at a 20%+ premium - you'd think they would have learned their lesson: it wasn't that PHYS was "physical" and GLD was "paper" - it was just a limited number of PHYS shares available and no arb mechanism that created the huge premium. Sprott is playing off this hype and trying to extend it in PSLV, but he can't avoid issuing more shares forever...

you keep talking about SLV as if it's fact that they don't have all of the silver they are supposed to, when there isn't a shred of evidence to support that oft-repeated lie.

Kid Dynamite said...

@Gloeshi - one more important point - you have this COMPLETELY backwards:

"every investor buying SLV is one investor less buying physical. SLV can be created - physical not."

no - every investor buying PSLV is one less investor buying physical. On the contrary - demand in excess of supply for SLV translates into real physical buying in the form of creation of new shares - which are created in exchange for physical silver. THat's why SLV's holdings have grown to over 300Mm ounces in the last several years - SLV's holdings reflect demand for the shares above NAV. Not so for PSLV.

SLV shares are created when arbs short SLV (due to demand for shares that causes it to trade above NAV), while simultaneously buying silver bullion. They (arbs) deliver the silver to the SLV trust and receive the newly created shares (to cover their short - they capture the NAV premium. Competition and availability of silver keeps this premium miniscule). When there is excess demand for SLV, it results in actual physical accumulation of silver for the trust. the same CANNOT be said of PSLV. Another fantastic irony...

Kid Dynamite said...

final point- you referred to buyers of Eagles:

"The skeptics will probably explain those buyers as fools, too. "

why would we do that? what you guys fail to understand is that none of us are necessarily bearish on silver. The fact that we understand that ZH, Harvey, Turd, and the rest of the Silver Mafia spreading misinformation are wrong about the nonsense they spew about physical vs paper doesn't mean we don't like silver. It just means that we know that as of yet, there is no disconnect between physical and paper prices - no matter how many times your heroes want to tell you that there is.

I am long SLV at the moment, and I will profit if the price of silver rises.

being long silver doesn't make one a "fool" - believing that PSLV represents the price of physical silver, however, does indeed make one a fool.

Gloeschi said...

long-term capital gains on PSLV are taxed at 15%, while it could be as high as 28% on Silver Eagles .

Brian O'Flanagan said...

KD said: "When there is excess demand for SLV, it results in actual physical accumulation of silver for the trust. the same CANNOT be said of PSLV."

That's a fantastic point. Those that want to "crush the cartel" would be far better off buying SLV than PSLV. Buy buying SLV, it will have to buy silver for the trust. But PSLV is a closed-end fund, it does not buy more silver when a shareholder buys the stock. Thus such buying has no impact on the physical silver market.

Kid Dynamite said...

quick clarification, Brian - SLV doesn't buy more silver - APs (authorized participants) buy more silver and deliver it to the trust in exchange for new shares. But yes - the rest of your point is correct: buying PSLV has zero impact on the "physical" silver market.

Brian O'Flanagan said...

yes, thanks for that correction.

Gloeschi said...

"you keep talking about SLV as if it's fact that they don't have all of the silver they are supposed to, when there isn't a shred of evidence to support that oft-repeated lie."

I apologize for assuming everyone here was aware of certain "shortcomings" of SLV. From their prospectus:

"The Shares are backed by silver, identified on the custodian's books in ALLOCATED and UNALLOCATED accounts on behalf of the trust and held by the custodian in ENGLAND [...]"

"The custodian is responsible to the trust for loss or damage to the trust's silver only under limited circumstances."

"The custodian has no obligation to replace any silver lost under circumstances for which the custodian is liable to the trust."

You being comfortable with JPMorgan holding unallocated silver for you explains your difficulties understanding why some people pay premium for Sprott.

That's fine. Just don't assume everybody else is stupid.

Kid Dynamite said...

@Gloeschi - seriously, if you want to have an intelligent discussion, i'm willing to spend my time with you. if you want to regurgitate what you're been told on Silver Mafia forums online, I'm not going to bother. These "shortcomings" are nonsense, and common to PSLV as well. read on:

If you read the actual SLV prospectus, what it says about the amount of silver in unallocated accounts is:

"there can be in the Trust account no more than 1100 ounces of silver in unallocated form."

(page 20: http://us.ishares.com/content/stream.jsp?url=/content/en_us/repository/resource/prospectus/silver.pdf&mimeType=application/pdf)

so there goes that nonsense. 1100 ounces out of 300,000,000. and there's a reason for that, too - it's just the odd lot of silver that they sell to pay Trust expenses.

as for prospectus disclaimers - please read the PSLV prospectus, where you will find each and every one of the following disclaimers:

"- The Trust will not insure its assets and there may not be adequate sources of recovery if its silver is lost, damaged, stolen or destroyed

-If there is a loss, damage or destruction of the Trust’s physical silver bullion in the custody of the Mint and the Trust does not give timely notice, all claims against the Mint will be deemed waived

-RBC Dexia, the Mint, the Trustee and other service providers engaged by the Trust may not carry adequate insurance to cover claims against them by the Trust.

-In the event the Trust’s physical silver bullion is lost, damaged, stolen or destroyed, recovery may be limited to the market value of the silver at the time the loss is discovered

-Under Canadian law, the Trust and unitholders may have limited recourse against the Mint.

-The Trust may terminate and liquidate at a time that is disadvantageous to unitholders

-The Trust may suspend redemptions, which may affect the trading price of the units

-Unitholders will not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act or the protections afforded by the Commodity Exchange Act

-The Manager and its affiliates also manage other funds that invest in physical silver bullion and other assets that may be held by the Trust, and conflicts of interest by the Manager or its affiliates may occur

-The Trust’s obligation to reimburse the Trustee, the Manager, the underwriters or certain parties related to them for certain liabilities could adversely affect an investment in the units

-Unitholders may be liable for obligations of the Trust to the extent the Trust’s obligations are not satisfied out of the Trust’s assets"

read that last disclaimer carefully... PSLV holders may actually be held liable for Trust obligations!!!

just because lies about SLV have been repeated over and over again doesn't make them true. So no, I don't have to be comfortable with JPM holding unallocated silver. The silver in SLV is allocated. Audited. Physical. London delivery standards.

Brian O'Flanagan said...

Whoa! Wait a second.

"The Trust may suspend redemptions, which may affect the trading price of the units"

Are you #$%ing serious?? So when the shit hits the fan, good luck to all those holding PSLV converting to physical after Sprott suspends redemptions.

PSLV = PAPER!!

Gloeschi said...

Okay, point(s) taken. Would you say GLD enjoys the same qualities as SLV (and I don't mean it in an ironic way).

Kid Dynamite said...

Gloeschi - i'm not sure what exactly you mean - I believe that GLD holds allocated, audited, London Good physical gold bullion backing each share, if that's what you're asking. Like SLV, they hold a tiny tiny amount of unallocated to pay expenses. (PHYS and PSLV, on the other hand, hold cash instead)

I also believe that GLD and SLV have been the best things to happen to gold and silver respectively in the last generation - bringing easy investment to the masses, and accumulating the largest visible stores in the world of their respective metals - a point that seems to go right over the head of most of the PM community. In other words, if GLD/SLV had never been created, I believe that the price of gold and silver would be much lower.

best of luck

ILUVPMS said...

Brian and Kid Dynamite and all: I want to say that this is an excellent topipc that needs to be highlighted and spread to the PM investors. Alot of people hype silver as being the next investment and "probably the next apple".

The amount of bullshit that is being hyped about silver is utterly amazing. I do contextual research as a hobbie and just want to add that when silver was doing its parabolic blow off top that the sheer bullshit that was coming out of the interenet and TV by the likes of SPROTT, TURK, EMBRY, Kingworldnews, TURD, the SILVERDOCTORS, JIM WILLIE, was nothing more than a PUMP.

EG: sprott was on BNN saying how silver will be the investment for this decade since gold was the investment for the last decade and that there is a silver shortage. Really? SIlver outshined gold last decade by beating it, why does it need to do it for another decade.

Turk: during this time frame was having interviews telling everyone that confidence in the dollar is gone and that precious metals is the only thing to buy. Dont worry, if you cant find any goldmoney.com is the place to go ( which he owns) and theyll be more thanhappy to help you out.. ya right..

Turd, the biggest moron of all, was telling people DURING THE RUN UP, that they had the comex people on the ropes and that silver is going ot go to the moon. He was even telling people on his blog that they can still by MINERS and six months from now they will look dirt cheap!!!! I dont think so turd... but good business setting up your own website spreading the same bullshit.

JIM WILLIE: this guy is a classic con: he was pumping silver saying how the cartel were also on the ropes and that silver will be 50 by autumn...

THe silverdoctors.com: this person was preaching to peopel to "STACK THE SMACK" when silver was slightly below 40" saying it was a bargain of a price and that the price will slingshot back to 70 by year end. He even kept on showing videos by a person named "Brotherjohn" whose analyses were less than amateurish ( who was proclaiming a 100 by end of dec 2011)!

Anyways, when silver did its usual correction: NOT one of these people knew what was going on and screamed manipulation!! The only person who understood what was going on and called a spade for a spade was BOB moriarty- the same individual who wrote articles about this very subject- The same individual who told silverdoctors off because he wanted to post the same rehashed bullshit that every commenatator wants to post- supply shortage.

Let me ask you a question: have you noticed on Kingworldnews that the interviewer always asked the mint guy CMI gold and silver about the premiums and the supply shortages... NOT ONCE has the owner of the mint said that there were delays due to supply shortages but rather an inventory or refinery issue!!!! NOT ONCE! even though the interviewer tries to coax it out of him!

Anyways, point being: in order for the price to get too the high level that people want tit to go they need to pump this silver shortage and global issue. I walk around toronto and see silver everywhere- no shortage.

Here are the articles that I asked silverdoctors to publish on his website: the articles that bob moriarty published on his , that he wrote, and that show the clear facts on silver. Guess what, silverdoctors ignored by request because he knows its bad for his business.

Maybe the owner of this website can be kind and publish them since they go with his thesis.

http://www.321gold.com/editorials/moriarty/moriarty042511.html
//www.321gold.com/editorials/moriarty/moriarty030811.html
http://www.321gold.com/editorials/moriarty/moriarty042511.html

Brian O'Flanagan said...

@ ILUVPMS

Thanks for your comments. I agree with you views on Moriarty. I remember reposting one of those April articles on silver and he was lambasted by all the silver bulls as a crazy old man who lost it. In hindsight, he was one of the few independent minds out there telling the truth.

Based on the response this article has been receiving, it appears to me that the tide is finally turning against the propagandists. People are finally starting think for themselves and question the constant stream of misinformation coming out of the silver pumpers.

There is nothing wrong with writing about the many reasons to invest in gold and silver. I am a precious metals investor myself. But the completely dishonest propaganda spread by the likes of Zero Hedge should be finally called out as such. It does us all a disservice if people are getting involved in the sector based solely such misinformation and the extreme number of websites out there today doing the same thing is a disgrace. It's well past time to bring honesty and facts to the discussion on metals.

ILUVPMS said...

Thanks for your comments. I just find the amount of misinformation on silver to be astounding. The majority of websites just rehash the same BS. Check out silverdoctors.com, they also published the article on sprotts 30% premium and also implied it to be indicative of the price of silver. Its stuff like that that get new investors or those who are not well informed to buy precious metals at the wrong time thinking that it "may only be a dip" I advocate holding precious metals and am an advocate of true money but also understand that Price dictates everything, that price is reality the hear and now, and that if you buy at an absurd price you may actually be holding for A VERY LONG TIME>

Katchum said...

You can say what you want, but people are still buying up PSLV. The premium keeps going up to 34% now and I say it's very bullish on the price of silver because of the premium-price correlation. http://katchum.blogspot.com/2012/01/pslv-silver-premium-analysis.html

GM Jenkins said...

Nice analysis, Katchum. Of course, what causes the premium to rise (much less whether such cause is grounded in wisdom or folly) is independent of what it means to future price action. If it is indeed an early indicator of rising silver prices, that's good to know. Your analysis is a good start.

MH said...

Hey guys, I've been stalking this site for quite some time in an attempt to get non-mainstream ("The Cartel") opinion and some counterarguments to the primary silver memes. No offense intended here, but I remember reading Moriarty articles as silver made it's ascension last year, and his continual claims that the top was about to blow off. Technically he was correct and vindicated, and much of his reasoning was sound, however he didn't even bother to acknowledge the repeated margin hikes that accompanied the crash in price. He just decided that he had been correct for the previous 6 weeks. How do you guys (Brian, ILuvPMS) rationalize him ignoring some of the facts with being "one of the few independent minds out there telling the truth"?

Here's the article I'm referring to:
http://www.321gold.com/editorials/moriarty/moriarty050611.html

Here's Moriarty's archives for some context:
http://www.321gold.com/archives/archives_authors.php?author=Bob+Moriarty

Brian O'Flanagan said...

you answered your own question with the statement "Technically he was correct and vindicated, and much of his reasoning was sound".

Whether he noted the margin hikes or not makes no difference. The margin hikes didn't crash the market, overleveraged speculators buying aggressively based on nothing but hype and misinformation crashed the market.

As far as any other facts missing, so what? What matters is results. Who sold hype at the peak and who urged caution? As they say in sports, "Look at SCOREBOARD"

MH said...

Just saying Brian, those are some important details and leaving them out, while not a lie, certainly doesn't equate to "a rational mind telling the truth".

Brian O'Flanagan said...

I understand, MH, and appreciate your thoughts.

GM Jenkins said...

Here's the director of Sprott Private Wealth, interviewed today by Business News Network. He starts talking about silver at 3:00 into it. His two bullish arguments are those in the Zero Hedge article:

some very strange things have been happening in the silver market … [1] the premium in our trust is 30% … [2] lease rates turn negative … classic sign of shortage.

He then says:

"there's not enough silver around for us to launch an SLV type trust … it would take five years of surplus"

http://watch.bnn.ca/#clip597818

ILUVPMS said...

GM Jenkins: i saw that interview while at the gym and could not beleive the bullshit this kid was spewing: total misinformation. The guy was stating that the premium was that high because investors cant get silver and therefore its indicative of the real physcial shortage and the true price... Guy said it with a straight face.. what bs!

Kid Dynamite said...

GM -

It's actually surprising that he says stuff like that in that interview - it's so inaccurate that it's borderline manipulation and could run afoul with regulators.

This guy talking about how it would take them years to buy an amount of silver equal to the largest visible store of silver in the world is a "no-shit-sherlock" moment... It took SLV years to accumulate that much silver too - and THAT is why the price of silver has done so well, as I've tried to explain!!! SLV was the driving force!

by the way - does ANYONE realize that Sprott has a silver bullion mutual fund already?!?!?! anyone who wants to buy silver at spot can do so through that fund...

I love reading the PSLV Yahoo Message board threads... they are speculating that someone is using PSLV as a way to accumulate physical silver! buying and redeeming PSLV shares! (ps - none have been redeemed for physical, if you look at the SEC filings) and get this - one guy thinks it might be a national mint!!

love it. that's why there will always be money to be made - because there will always be idiots out there.

Slacker Stacker said...

Do you have any evidence that ZH is taking money and posting propaganda? Do you feel that it is similar to the propaganda that gets broadcasted on every t.v. station 24/7?

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 dicks and blow loads in each others faces. Is there at least more evidence in what you claim?

Jeanne d'Arc said...

@Slacker Stacker:

Please see here for an account of how ZH clearly promoted a commercial interest against all rules of ethical journalism.

Thanks for your comment. But please watch your language next time.

ILUVPMS said...

Hey Kid Dynamite: Maybe you can chime in at this blog and straighten out ranting andy about why the PSLV premium of 30% is not indicative of the true price of silver or the supposed shortage.

Cheers,

Ranting Andy on the Shortage of PHYSICAL SILVER
www.silverdoctors.com

SRV ES339 said...

Wow, you guys could give conspiracy theorists a bad name if you're not careful...lol!

Hate to spoil the fun but the premium is simply what silver investors are willing to pay for a safe, liquid, silver (not paper) investment without the cost or hastle of dealing with storage, security, etc.

How do I know... I own six figures worth of PSLV. Lets me get as close as possible to the real thing, yet gives investors the ability to easily sell into the paper induced price hits to protect their investment.

But happy bashing... not sure I understand what the point is though (btw, I've been banned by ZH so am not exactly a fan)!

SRV ES339 said...

Oh, and of course the premium doesn't represent the true value of Ag... but it sure isn't silver price negative now is it?

Jeanne d'Arc said...

@ILUVPMS

I don't want to prejudge KD, who is infinitely more experienced in such matters than me, but two facts are quite telling:

1. Premium: I can buy a lump of silver, delivered to my house for between 5 - 8% over spot. Less if buying in serious bulk. Silver dealers are not especially known for their altruism, so I am forced to assume that they are not taking a loss on my behalf. Anything above 5 - 8% is an 'idiot tax', payable by me in return for my gross gullibility.

2. Shortage: Even if I were as astonishingly wealthy as our resident billionaire, GM Jenkins, I could still convert all my currency into physical silver without the various national mints even glancing in the direction of their inventories.

ILUVPMS said...

SRV ES339 your comments support what we are saying: the premium doesnt represent the true value of silver but they are trumpetting it as the truth. Also, its not indicative of a supply shortage as they say on tv. Yes, 30% above premium just means that there are idiots out there who are willing to well... pay 30% more for so called silver... The saying a sucker is born every minute is not a saying but actually a proven Theory Or Law.

SRV ES339 said...

@KD

Sorry about the pesky facts, but the Sprott fund does not hold phys, it tracks spot (so they started PSLV).

PSLV is not an ETF, it's a trust, and it is 100% backed with phys.

Sprott does not profit from the premium unless he owns the stock.

Jeanne d'Arc said...

@SRV:

Well done on your six figures' worth of PSLV. You could have had six figures' plus c.a. 30% of SLV for your trouble. What evidence do you have that SLV is not 'safe'? Or, more to the point, that PSLV is more 'safe' than SLV, given what KD has already pointed out about the prospectus terms of both SLV and PSLV being virtually identical?

GoldMoney charges c.a. 3 - 4.5% above spot for silver purchases, and a tiny amount for storage. So you'd save yourself over 25% by choosing that option, and preserve your liquidity, as you can sell at will for no fee at all.

Or you could buy physical silver with your six figures worth of wealth, and even with buy/sell commissions would not come close to paying a 30% premium.

Finally, the 'point' is that at Screwtapes we would rather prefer it if blatant, made up nonsense was not continually perpetuated on the internet without even the slightest bit of investigation. You might call it pointless 'bashing'. We call it public service.

JdA

SRV ES339 said...

@ ILUVPMS

So don't buy it... I'm sure most of the larger PSLV investors have been invested in the Trust since inception... when premuims were <10%... I know I did.

Too bad you didn't on it... guess that's the real beef...lol!

Brian O'Flanagan said...

@ SRV, actually PSLV is NOT 100% backed. It is 70% backed. For every $1 of stock market value, they own $0.70 of silver.

SRV ES339 said...

@Brian... great job on the math... I thought we had agreed on the premium to NAV but thank's for "the bleeding obvious"

In closing, I read the ZH piece and no thinking investor would conclude it is the true phys premium

Brian O'Flanagan said...

Exactly! So why would ZH make that claim that it DID represent the true phys premium, when all rational people surely know otherwise?

Propaganda. Why would ZH become a propaganda site? Is someone paying them a lot of money to look the other way and use the site's influence to spread propaganda? That is the question. Perhaps "Tyler" can post here and clear it up.

Kid Dynamite said...

@SRV ES339: you wrote:

"Hate to spoil the fun but the premium is simply what silver investors are willing to pay for a safe, liquid, silver (not paper) investment without the cost or hastle of dealing with storage, security, etc."

yes - exactly - because these "silver investors" are fed a constant diet of lies and propaganda - that's precisely the point here. They are going to get buried, just like they did when they were buying PHYS at a 20% premium in 2010, screaming about how it was "physical" while GLD was "paper."

I have no idea what you are trying to say when you write "Sorry about the pesky facts, but the Sprott fund does not hold phys, it tracks spot (so they started PSLV)."

I urge you to catch up on my blog posts on PSLV - there's one thing that cannot be debated: you will not find more PSLV "facts" anywhere else on the web.

you also wrote: "Sprott does not profit from the premium unless he owns the stock."

if you read my blog you can find out a rough estimate of just how much profit Sprott made from scalping his own fund this year...

http://kiddynamitesworld.com/eric-sprott-sells-the-balance-of-his-pslv-shares-for-his-for-profit-funds


@ILUVPMS - if you think I'm going to go to the Ignoramus forums and argue with Silvertards, you are mistaken. (Notice: I said I like to read an laugh at the Yahoo message board posts, not argue with those idiots!)

People who want to be educated can come here, read my comments, and ask intelligent questions, which I will be happy to answer if I see them.

SRV ES339 said...

maybe they're a blog that profits from # of hits and uses sensational headlines (like ZH is paid to publish propaganda) to increase traffic... pretty far fetched eh...lol

Kid Dynamite said...

@SRV - you can't come here and write:

"PSLV is not an ETF, it's a trust, and it is 100% backed with phys."


and then get all sarcastic and pissy when Brian correctly points out another one of the great ironies of the silvertards:

"actually PSLV is NOT 100% backed. It is 70% backed. For every $1 of stock market value, they own $0.70 of silver. "

to clarify - there is only ONE silver trust/fund/ETF that is CONFIRMED to have significantly less silver than its market value indicates: that fund is PSLV. this is a fact.

Brian O'Flanagan said...

@ SRV. Far fetched indeed. Many of Tyler's posts on other topics are fairly factual and not sensationalistic. Zero Hedge is not Business Insider.

Yet with silver 99% of the posts use sensationalist, false headlines followed by completely unfounded rumor, propaganda and pure nonsense. Furthermore, he frequently reposts articles by professional silver touts such as Casey and Sprott. Why is that? Why is ZH always pumping PSLV? Why isn't he pushing his readers to buy Johnson Matthey 100oz bars?

Is it, perhaps, because he is being paid by Sprott to tout his funds?

SRV ES339 said...

@KD: You defend SLV (the paper tiger)and beat up PSLV (arguably the the fairest and most transparent Ag investment vehicle on the planet)... you make no sense and I will leave you to your fantasy.

KJ said...

To the contributors, whether via posts/comments section - thanks - this is a great site. Refreshing.

KD, I think you brought up a great point that no one else talks about - no one is redeeming from pslv. All I've come across is 2100 units since inception, maybe to pay fees/expenses of the trust. It's likely there are a # of other 7-8 figure longer term investors in pslv like SRV. If they got in at say 105 premium, then they're laughing. But this blog post is not partly about past investors who timed it better. It's partly abut who the heck on this planet would be stupid enough to get in now with a 30%+ premium. SRV - you ever planning on redeeming your shares into hard physical or along for the paper ride?

Dave in Denver/Jesse believe there is a short squeeze going on with pslv ie. naked short selling. Would this explain the premium surge as shorters are attempting to cover? If so, could traders play around with the premium to sell whatever story you want sold about the silver market/pslv trust? If the naked short is the story, then we've had all this hype about rising premiums/omg silver shortage when really it's a rising premium/short covering story.

KJ said...

105 = 10%

Kid Dynamite said...

@KJ -
all evidence suggests that there is no naked shorting going on in PSLV - if there were naked shorting, the premium would be a lot lower. It's impossible to borrow shares right now, so it's impossible to short shares right now - hence the huge premium.

Yes - it does make sense that people are having their borrow recalled and having to cover shares (someone emailed me that this happened to them on Friday) - that's the opposite of naked shorting though.

@SRV - you are proving to be a perfect example of the victim of the Silver Mafia's propaganda - you faithfully recite "PSLV = physical, SLV = paper," while I've pointed out to you that we can be quite sure that you are overpaying for the silver behind one of those funds: PSLV. There is not a shred of evidence backing a single one of the oft-repeated lies about SLV. Repeating something doesn't make it true. Best of luck with your 6 figure PSLV "investment"...

PSLV and SLV are both paper instruments that own physical silver bullion, by the way.

Robert LeRoy Parker said...

We're all monkeys.

Joseph said...

Read all the comments and have learned quite a bit. I was wondering if someone would care to explain something to me. I recently read that naked shorting of SLV shares amounted to creating the appearance of more physical silver in the market because each shorted share is assumed to be backed by physical metal, but is not. Further, this mechanism is being used to keep the price of silver on the futures market artificially low.

I am having trouble wrapping my head around this idea. Could someone explain why this would be true (or not)?

Kid Dynamite said...

@Joseph, try this:

http://www.gotgoldreport.com/2011/06/record-net-short-position-for-slv-rally-fuel-.html

SRV ES339 said...

@KJ... thank you for the question
Unfortunately my PSLV is in a retiremnet investment so I can't take delivery (which is why I use PSLV... closest to the "real thing" and much more so than SLV). I use SLV to "day trade" the banking cabal raids for liquidity.
I'm long term investing in PSLV but do trade out through danger zones (like now... I'm all out looking for a bottom).
Working on a strategy to monetize the PSLV premium swings though. I sell PSLV after premium spike and buy SLV... then back to PSLV once the premium gets back to "normal" (not firm yet but somewhere around 15%). But, I would be back in PSLV with any report of financial system stress because I don't trust SLV to be backed by the metal... it is not (no matter what KD says)and PSLV is. So far, I like the plan and would welcome comments (what have I missed?)... if it interests anyone on the site, good luck with the trade!

SRV

KJ said...

SRV, thanks for the response.

you said: "(which is why I use PSLV... closest to the "real thing" and much more so than SLV)."

I'm confused. How is pslv much more so of the real thing than slv in your retirement account?

Anyways, thanks for the answer - you won't (can't) redeem pslv into physical so you're comfortable with your retirement account in paper dollars.

Also, confusion again. Why does it matter to you whether slv is backed by metal (its fully allocated btw) since you are trading for your retirement account and won't/can't redeem for physical.

SRV ES339 said...

@KJ... good questions (tough to explain strategies in a couple of paragraphs).
Same answer for both questions... Simplest way to explain it is in the context of MF Global... SLV is a shell game (again, they do not have fully allocated metal to cover all the paper investment... at best, they had it and it's been leased or moved to London and used for collateral) and if SLV does an MF Global you could lose everything... in simple terms, I believe (for good reason) that Sprott is fully backed (less the premium) by metal and that my investment is safe with them (and of course the trading platform broker I use). I do not have the same faith in SLV and would only use it to trade short term.
Sprott metal is independantly audited and held in the Royal Canadian Mint (a Crown Corporation managed and directed by non bankers... 80% have cival service, not banking, backgrounds). SLV uses JP (hey Jamie, hey Blythe) Morgan as custodian (nuff said).

Best wishes.

SRV ES339 said...

@KD "Best of luck with your 6 figure PSLV "investment"...

Thanks, and same with your investing.

KJ said...

SRV,

so what you're saying is in a collapse scenario (ie. MFG style but probably way worse), you believe slv metal is not allocated and therefore, if you own enough shares for a basket, your shares are pointless b/c the metal will be long gone (and presuming you choose not to redeem the basket and take possession).

But of course, you would be holding slv in your retirement account since you cannot redeem so you believe the value would be essentially worthless.

Whereas with pslv, you will hold on to your pslv shares and ride out the storm looking to come out on the other end with all your pslv shares and your pslv shares will not be worthless.

Am I in the ballpark?

ebworthen said...

Trolling ZH to get readership.

Tsk, tsk.

The point of the ZeroHedge article wasn't to pump PSLV, but to point out the damage done by the MF Global clusterphlock.

Those who wish to speculate in Silver without actually holding it in their hot little hands (shiny!) are willing to pay 30% premium over physical because the MF Global "certificates" were a whole lot more worthless and un-owned than a Physical backed ETF like Sprott.

I believe the words used by Mr. Durden were "closer to physical".

You don't exactly sell the Sprott ETF by pointing out that it is at a 30% premium to physical silver, do you?

Propoganda?

C'mon now.

Jeanne d'Arc said...

'Tyler Durdon' has now officially commented on this article. In the interests of fairness, I reproduce his comment here:

I) Nobody pays us to post. II) we wish the best of luck to anyone who wishes to buy 10MM or more in physical silver without incurring 20%+ premiums on the order when all costs are factored III) the Sprott PSLV NAV spread has continued to leak wider, and nobody paid us to do that either.

http://www.zerohedge.com/news/cost-recoupling-235-sp-points

Kid Dynamite said...

JdA - the scariest "sophie's choice" question of all is:

Is Tyler really that ignorant that he actually believes the horseshit he is spewing? or does he have ulterior motives as Brian asked in this post?

It's a lose-lose proposition for the ZH audience... (and for the audience of every other PM blogger spewing bad info.

hint, for those wanting to buy $10MM or more in physical silver without incurring 20%+ premiums: 1) buy and redeem SLV or 2) stand for delivery on COMEX 3) call Bron Suchecki at the Perth Mint - he will sell it to you.

KJ said...

"hint, for those wanting to buy $10MM or more in physical silver without incurring 20%+ premiums: 1) buy and redeem SLV or 2) stand for delivery on COMEX 3) call Bron Suchecki at the Perth Mint - he will sell it to you."

yes, just to do the math for anyone that's interested, that's about 333,333 shares at say slv for $30 = about $10M. 50K = 1 basket so one would get about 6 baskets. Let's round up - 350K shares at $30 = $10.5M = 7 baskets.

The basket silver amount currently is about 48,600 oz's. So 7 X 48,600 = 340,200 oz's. Each London Good Delivery Bar for silver is b/w 750-1100oz's. Using 1000 oz's/bar, that's about 340 bars.

Shares outstanding is about 315M. Average volume per day for the last 3 months is about 19.4M oz's.

And for this example of about $10.5M, 'all' one needs is 10.5M shares.

KJ said...

"Those who wish to speculate in Silver without actually holding it in their hot little hands (shiny!) are willing to pay 30% premium over physical because the MF Global "certificates" were a whole lot more worthless and un-owned than a Physical backed ETF like Sprott."

they weren't MFG certificates. Customers held comex gold/silver warrants. To say the warrants are now worthless and un-owned is to skim over that thing called bankruptcy.

sprott pslv - you must own a minimum of about 30,000 shares to redeem which is about 10,000 oz's or 10 silver LGDB's. If you hold less than 30,000 shares, the whole pslv-backed by metal argument is mute.

For those with more than 30,000 shares, an MFG scenario could happen to you. For example, you are a customer of brokerage "X". You purchased your shares through brokerage "X". Brokerage "X" goes under. Will you get your accounts transferred? MFG customers would've thought so. If so, happy days. If not, 72% cash? If so, a physical backed sprott etf called pslv is rendered meaningless.

You hold pslv in an retirement account. Again, unless you're willing to redeem, take possession and thus turn your retirement account into a non-retirement account, along with the associated taxes, you cannot redeem and take possession. Physical backed pslv doesn't matter if you can't redeem.

Some other arguments: slv isn't backed by metal or there's X number of claims on the same metal that slv will collapse and this doesn't apply to slv. Again, slv is fully allocated. You can buy enough shares of either pslv/slv and redeem. If there's a run on slv, we've got way bigger issues to worry about and we'll find out how comfortable pslv holders will feel about their pslv silver backed trust.

Keep in mind with either pslv/slv, holders of shares run the risk the trusts will terminate for the reasons listed on the prospectus. In other words, if that happens, you will get cash if you for some reason decided to hang on to your shares. Unless you redeem before termination.

Kid Dynamite said...

I'm sorry, I just can't shut up on this one: Tyler's "we wish the best of luck to anyone who wishes to buy 10MM or more in physical silver without incurring 20%+ premiums " response is amazing.

The silverbugs started by arguing that PSLV is a good deal because RETAIL investors have to pay premiums for physical silver coins anyway - that's a retail vs wholesale pricing issue that I've talked about before.

Now, Tyler tries to twist it the other way and say that LARGE purchases of silver require the buyer to pay an even higher premium!!! Utter, complete nonsense. But hey, don't take it from me, Eric Sprott will tell you so himself:

http://kiddynamitesworld.com/eric-sprott-dispels-one-of-the-greatest-silver-myths

and now some silverbug will pipe in about how long it took Sprott to get his silver from the PSLV purchase, and I"ll have to refer you to:

http://screwtapefiles.blogspot.com/2011/08/erics-delivery.html

KJ said...

"And for this example of about $10.5M, 'all' one needs is 10.5M shares."

lol, based on the example, all one needs is 350K for the example. Not 10.5M shares.

KJ said...

"There are two types of gold–there’s physical gold and there’s paper gold, and the closer you are to physical the higher the price is. That’s why for example the Sprott Physical Silver Trust is trading at a 30% premium to the Comex price–the reason is everyone knows the Comex price is paper, and that there’s really physical silver in the Sprott Physical Trust."

http://bullmarketthinking.com/exclusive-interview-james-turk-theres-physical-gold-and-paper-gold-the-closer-you-are-to-physical-the-higher-the-price/

it's interesting, this "closer to physical" concept/mantra that has permeated throughout the metals community.

Comex isn't just paper - you can stand and get delivery at essentially the spot price.

And they are, imo, equating trading pslv with investing (with intention of redeeming) in pslv. If you are trading pslv and never want/can't redeem, there's a # of other vehicles.

If you are investing in pslv with the option of redeeming (hold the min # of shares), you are willing to pay a premium for such an option. This beats out slv if you don't have enough shares for a basket (otherwise, just hold slv).

As each day goes by, get the distinct impression these bold statements, like the one highlighted above by Turk, are framed and articulated and it ultimately leads to a majority opinion by the metalbugs and everyone at Screwtape/KD are crazy.

Shortage, closer to physical, slv not backed by metal/pslv is real (they are in essence the same vehicle - pslv likely has tax adv's, less currency risk for non-US investors)....all made up reasons that end up highlighting pslv over other vehicles and silver in general.

In reality, I'd bet the vast majority of pslv holders are in it for the trade and I'd suspect there's a heck of a lot that think they own metal backed by pslv when really they don't even qualify.

Again, if the intention is to trade and get out at higher prices, there's other vehicles out there without paying 15%-30% premium and of course there's slv.

Of course, they'll never come out and say pslv is essentially a trading vehicle that really doesn't deserve the outlandish premium. Instead, we'll hear the 'it's the closest thing to physical' like arguments.

In other words, these 'guru's' are 'educating', imo, the public into believing paper is as good as possession when they should be doing the opposite considering they're also 'educating' the public of what's wrong with the monetary system, hyperinflation, paper price manipulation, etc.

Brian O'Flanagan said...

KJ, you summed it up perfectly. If the gurus were consistent with their beliefs - they'd be advising their followers to buy physical and only physical. How one can claim that hyperinflation and monetary collapse is imminent, yet thinks it's "a-ok" to put money in a paper vehicle like PSLV is beyond me.

In other words, if you're in it for the trade - SLV, PSLV, futures, etc is fine and there really is little difference between them. But if you are hedging for doomsday - physical is the only rational option.

KJ said...

"... II) we wish the best of luck to anyone who wishes to buy 10MM or more in physical silver without incurring 20%+ premiums on the order when all costs are factored..."

Tyler uses the words "when all costs are factored". I presume he is referring to delivery?

So comparing buy options:

a) buy comex long silver contract at spot - pay delivery costs extra

b) slv - buy a basket of shares at slv price - redeem - pay delivery costs extra

c) pslv - buy a basket of shares at pslv price 30% above nav - pay delivery costs extra

so I might be mistaken here but with pslv - you're still paying the extra premium on top of the delivery costs which one will have to pay no matter which vehicle one chooses.

In other words, if you buy on comex/slv, it is not a premium but delivery costs/additional fees on top of spot.

If you buy and redeem from pslv, you are paying both the premium and delivery costs.

He's not comparing apples to apples imo.

MICHAEL said...

I like Silver Bullion Trust, related to the Central Fund of Canada. The premium to NAV is right now under 4%, probably as safe as PSLV. It trades on Toronto as SBT.U and is traded in the US as SVRZF. You people who trust JP Morgan to hold your silver, well you can't fix stupid.

KJ said...

Michael,

there is no delivery option with sbt. The trust has the metal, but you cannot redeem your shares. Since one cannot, one might as well trade slv without any premium.

slv, pslv, sbt, etc. are all fully allocated.

I'm starting to conclude that many investors in pslv/sbt/etc., all are under the assumption, rightly or wrongly:

a) in a collapse type scenario, you are safer holding shares in pslv/sbt/etc. vs. slv/gld for various reasons.

b) believe slv/gld does not have the metal/many claims on same bar and will be a run on slv/gld

c) paper prices of gold/silver will justify investors holding on to their shares to after a collapse

d) pslv/phys/etc trusts will not terminate prior/during a collapse

e) hyperinflation will devalue dollars but paper prices of gold/silver will more than offset loss of purchasing power via devaluation

MICHAEL said...

It is true that SBT has no delivery option, but you do have redemption rights for fiat currency. In the event comex is obliterated along with SLV and the like SBT's value would give you enough currency to go and purchase physical to come out even. Of course your core physical holdings should already be in your hot sweaty hands. I believe capital gains treatment is better than that of SLV or bullion.

KJ said...

Michael,

Thanks for the response.

Question - in the event comex/slv are 'obliterated', what do you think will be the prospect for the paper price of silver?

MICHAEL said...

The paper price of silver would reflect the cash market bid on physical bullion. You don't need a futures market for that. I think after a collapse of the CRIMEX, paper prices will MORE accurately reflect the true value of metals. The spot price now is independent of the futures market. It is obviously affected by it, but not dependent on it. That's why backwardation can and does occur.

KJ said...

but you're holding sbt shares whose NAV is dependent on the underlying futures paper silver price? or am i missing something? if NAV dwindles, one would be selling their paper shares for paper dollars (or redemption for cash) and then attempting to buy physical silver at the newfound physical price...

Kid Dynamite said...

Michael -

do you have any reason to believe that the audited, allocated, London Good Delivery silver bullion held by SLV is any less "real" than the silver held by SBT or CEF? Surely you realize that the SLV Trust does not hold COMEX silver futures or any other kind of "paper"?

KJ - what Michael is saying is that the NAV of SBT really depends on the value of the physical silver bullion that it holds (not the "paper" COMEX price), and that if there was a transformation (for lack of a better word) of the COMEX, that "paper" prices would match physical prices. Michael is correct that the value of the SBT (and others: SLV, PSLV, CEF, etc) depend on the price of physical silver bullion, except that paper prices and physical prices are already currently equal, as we've discussed on these forums multiple times, and also except that SLV, PSLV, SBT, CEF, etc all own the same thing: physical silver bullion, not COMEX futures.

MICHAEL said...

Comex reserves the right to deliver SLV in place of good delivery bars. SLV reserves the right to deliver comex futures contracts. This is nothing more than a criminal circle jerk and it is going to end in many tears and remorse. Why oh why did I trust the banksters with my life savings will be heard through out the world.

Kid Dynamite said...

Sorry Michael, both of those claims are blatantly, factually, completely, incorrect.

What you're probably confused about is the EFP (exchange for physical) market at the COMEX - i explained this in detail on the Zero Hedge comment thread when JS Kim posted nonsense about the EFPs. What happens is that IF both parties agree to swap future for bullion, they can do so. Similarly, instead, both parties, IF THEY BOTH AGREE, can swap futures for SLV. If you want a free tutorial on the subject, you can read my comments here:

http://www.zerohedge.com/article/js-kim-max-keiser-discusses-banker-manipulation-gold-silver-futures

Aside, SLV in no way shape or form reserves the right to deliver COMEX futures contracts.

You are another victim of the Silver Misinformation Cartel. How else would Eric Sprott sell his product?

MICHAEL said...

I stand corrected. Thank you for your response.

Bron said...

KJ, the buy and redeem SLV is the best plan. Reason is that if SLV fails to deliver, then you have called them out as a fraud - imagine the impact on the market if that happened. As to risk, well anyone who has the money to buy 10moz has the money to sue and ensure they are compensated.

Lets see, who out there has the money to buy 10moz and is not a mainstream investor who would like to challenge the system. Then again, maybe one wouldn't want to make a big deal about testing SLV because if SLV did deliver then one of the biggest silver memes would be dead in the water.

KJ said...

KD, thanks for the response.

If i understand correctly, and I've reviewed a few different prospectus', the NAV is based on the London Daily Silver Fix vs. comex future price.

Trying to imagine how this would look in a hyperinflated dollar world - the London Fix is in US dollars - if physical prices shot up post 'transformation' - will the USD still be the currency of choice or will a different currency be used to fix the price?

Nonetheless, if NAV is based on the LDSF which is based on physical prices (which right now is the same as paper prices), then in a post 'transformation' world, one in theory would hold valuable shares in gold/silver backed paper products?

Then the risk becomes a) did you register and take possession of your share certificates b) did the trust/fund terminate before/during the 'transformation' which would require a risk analysis of the possible termination events in each and various prospectus.

Kid Dynamite said...

"Nonetheless, if NAV is based on the LDSF which is based on physical prices (which right now is the same as paper prices), then in a post 'transformation' world, one in theory would hold valuable shares in gold/silver backed paper products?"

yes - exactly the point - as long as SLV/CEF/PSLV/SBT whatever instrument you want to talk about holds bullion, then the value would still be there - barring any sort of crazy share theft scenario which you are referencing, or termination of the trust.

victorthecleaner said...

Hi,

I am a couple of days late, but perhaps you are still interested.

I a SHTF scenario with bank holidays, capital controls etc., it will probably make a big difference in which jurisdiction your investment is located (if it is too heavy to just take it home before the SHTF).

In this regard, you may not like SLV (or GLD) because the trusts are subject to US law, but the custodian is based in the UK. With PHS.U (the Toronto listed version of PSLV) or SBT.UN, you at least get a clean case of Canadian law. Depending on the political events, this may or may not make a big difference.

By the way, PHS.U in Toronto is quoted in US$ although it is listed on the TSX - what will they do in case of the US$ collapse that some people fear? A reason or a pretext to shut down the trust? SBT.UN is at least quoted in Can$, and you are totally out of the US with that one.

By the way, none of these trust shares are 'securities' in the regulatory sense, neither SLV nor PSLV. Owners of MF Global commodities accounts have just figured out that they did not own securities either.

Similarly, you need to think about GoldMoney (afaik the channel islands are part of the United Kingdom, but not of Great Britain - the Queen represents, Her Majesty's army protects, but the London parliament does not control the budget - lots of small-print and century old case law - happy reading) and about Bullion Vault and whatever.

If you want to avoid all this, you can still buy physical silver loco Zurich, say, and either take the wealthy-investor-type retail 5kg or 15kg bars over the counter, or you can buy 1000oz LGD bars and leave them in the system or perhaps move them over to ViaMat if you have an issue with the custodian being a bank.

Both options work for around 5% over spot. No need to pay a premium that Sprott's hedge funds can siphon off.

Victor

Brian O'Flanagan said...

Thanks Victorthecleaner, those are all great points. My worry about Canada is the close relationship between it and the US that may result in some kind of a deal whereby Canada forces repatriation of assets to the US.

Besides Via Mat, are there other reputable non-bank depositories in Switzerland that you are aware of?

Brian O'Flanagan said...

Here's Casey on the Switzerland gold storage option:

http://www.caseyresearch.com/pdfs/1245260536-20090529_0905Switzerland_BG145.pdf

victorthecleaner said...

Brian O'Flanagan,

yes, as a US citizen you might get screwed regardless of where your investments are. For a Canadian citizen, however, this might be a good point for looking at into PHY.U or SBT.UN.

Concerning Switzerland, another suggestion is to look at private banks that only operate domestically and thus cannot easily be blackmailed by the USG. Think about what happened to UBS and Credit Suisse - operating internationally, especially in the US, entails a huge political risk that has not yet been sufficiently appreciated yet.

Victor

victorthecleaner said...

Apologies for the poor typing in the previous posting.

'Qualified Intermediary' is the buzz word. Any financial institution abroad that deals with a 'US person' (in terms of US tax law) needs to be registered with the IRS as a 'QI' which includes some reporting requirements to the IRS.

Now you need to find out whether a simple custodial relationship is a 'financial service' in that sense. I guess no, but I am not an expert on US tax law. Lucky me.

Victor

Brian O'Flanagan said...

For those of you still not convinced that there is no premium on physical over paper, read Kid Dynamite's post on Sprott's offering.

The evidence shows that Sprott just bought about 9 million ounces at.......drum roll.......SPOT!

http://kiddynamitesworld.com/paper-and-physical-silver-prices-are-not-decoupling-yet/

Case closed.

ultarnerd said...

I wasn't even going to bother posting this after I had a bit of difficulty from Google but figured it might be a good idea anywise.This site is terribly biased, big time and I had a lot more I could have said.I just asked about this site on http://marketwatching.freeforums.org/gold-and-silver-price-tuesday-21-jan-2012-t1159-15.html
Scroll to the bottom or near it where I ask about here.Seams Im not alone.They are mostly people who were given a hard time on Marketwatch forum got disgusted having their posts deleted etc etc and started this one to avaoid censoring.After you read the stuff by these prople you will probably questin everything the media tells you or more inportantly wont mention if at all.They were usually too knolagable.

Propaganda can go both ways at once, so sometimes you need to ask why the propaganda.For gold, by people that want to sell gold, not really a lot of those as most of them only advertise on there mint sites.However the ones who are trying to protect the dollar, piles of them, and big ones too.I would guess even a few that want cheep gold to buy along with multiples of other possible reasons.So yes I do believe there is some pro gold and silver propaganda, but wow a lot more of and more reasons for propaganda for, pro dollars,anti gold and silver propaganda. Huge numbers of paper bugs that have the money and power to do propaganda, big time.So yes I do believe there is a lot more propaganda that's really propaganda that condemns, gold and silver, over the much larger numbers of people that are pro gold that do not use propaganda but actually believe in what they are doing.And to state the obvious, if you are using propaganda and want to discredits Zero hedge you post something that discredits them.If it looks like a frame up and walks and quacks, like a frame up, then it probably is one.It was an article too obviously wrong not to be intentional.
How high can gold or silver go,no limit, because there is no limit on how low the dollar can go, none at all.We all know about the currency crisis that's likely to unfold so once the dollar starts losing value rapidly enough, that anyone can see it even the dummies, where do you think those panicked dollars will try and go.Only thing keeping it all from happening now is people are really and truly dumb.
Well guess what the posts on Marketwatch have almost forever had this guy American Patriot who over and over never posts anything positive on gold, ever, except to say it makes pretty jewelry.Well I figured out he was probably a hired shill when I pointed out this guy showed to much knowledge to never, ever, post anything positive on gold or silver, I got my first post deleted and then another.Others came to the same conclusion the guys was a woman and was being payed. forget the details and yes some of their posts got deleted too.It was odd for me as I posted all the time and never had a post deleted before and I even managed to avoid using his name on the second post.So yes I believe there is propaganda pro gold and silver but a hell of a lot more true propaganda pro paper.No I don't trust paper gold or silver and for good reason.For those not up on this take a look at MF Global and on their bankruptcy and where they borrowed on the same gold multiple times, so no one even knows who actually owns the gold. And don't forget those 2 banks Scotia Monica and I think it was JPmorgan but not sure now or on spelling and not worth my wile to check, both were caught charging storage fees for gold they did not keep, yes that's right think about that for a while, do you believe there is no crime because they are not caught yet.Hey its JPM that I think at least owned GLD and SLV. Its a good guess that they figured out a way to do sneaky tricks to do the same thing, on actually owning no gold, but are now clever enough to figure out a way to sell gold they still don't actually really own and protect themselves legally with out actually owning any themselves.Yea like they suddenly became honest, I don't believe it.

openid said...

easyDNS is the *domain registrar* for Zerohedge.com, not the actual registrant.

Warren James said...

@openid, sure -> and as I pointed out it doesn't prove anything in particular - in the past I have used a candadian-based registrar because they were cheapest.

Since writing that comment however, I've discovered a lot about social media advertising including who Sprott uses. It's all quite interesting and only cements the conclusion that the search-engine optimization and rumour-mill-creation around precious metals is not just systematic but deeply embedded in most of what most perceive as 'news'. Cheers.

Stig Blixt said...

"Tyler Durden" is a character from Fight Club, in which, among other things, he founded an offshoot of the club called the Misinformation Committee. That should give you an estimate of the credibility of the crap that ZH posts.