...at least, not as it is commonly given.
Reasons why I don't buy into the typical conspiracy theory for silver, as it is normally presented:
1. No human organization is that efficient - small conspiracies can work, but the larger an alleged conspiracy must be, the less the chance of it functioning properly. As we can see, the explanations that are given keep requiring an ever-larger conspiracy of bankers, regulators, and politicians, and thus it becomes increasingly implausible.
2. The supposed plot is totally unbankerlike. Bankers like to make money risk free. They don't like to gamble. The normal banker position would be to buy silver on a hedged contract, buy some physical silver, and then sell silver on the paper market, collecting time premium, month in month out, with virtually no risk.
3. The plot makes no sense as far as accomplishing anything useful for bankers. Bankers thrive in any environment, in inflation, deflation, etc. They thrived under a gold standard, and they thrive under paper. In any case, as far as money goes, silver is second fiddle to gold, historically. If bankers cared about the price of one or the other, it would be gold, not silver.
4. The plot as it normally explained is internally inconsistent, and therefore irrational. If bankers wanted to suppress silver, they would aggressively promote mine development. Nevertheless, the conspiracy, as normally expressed, is to suppress silver AND silver miners. Low prices for miners would hinder mine development, and eventually lead to higher silver prices. This is obvious, and in fact, I think, it is why bullion banks came into existence in the first place. That way bankers could easily assist in mine development, not hinder it.
5. The perceivable facts are inconsistent with the plot. When it comes down to the conspiracy theory, you end up with two core predictions which must come true, if the theory is true. First of all, you have to have commercials take losses from the supposed naked shorts, and second, you need to have a delivery crisis. Both have been long predicted, but neither have happened. In fact, not only has no commercial been bankrupted by silver trading, none have ever recorded a loss from silver, despite the requirement that they mark the trades to market.
6. It is alleged that the banks are trapped by their short position and have to try desperate measures to escape. The bankers can read the silver newsletters as well as you or I. They know of all the people trying to trap them. Thus, when Bear Stearns was liquidated, and JPM took over the profitable Bear Stearns long-gold/long-silver positions, did JPM use those position to escape from the supposed trap? No, they simply liquidated it. That isn't what someone that is trapped would do.
mechanical application of the rule tying the required margin to the computed volatility'
They did not apply the rules the same in 2008 when JPMorgan was pushing the market down. JPMorgan had a ton of nake shorts and they never fully investigated exactly how they clobber the market in such a short time. PAAS went from 42 to less than ten in an extremely short period of time. I forget exactly how much lower than 10 but I kind of remember I got my first purchase under $9. I purchased up to 15 and started selling. It went down again and then increased again. It was a period of my best trades.
They used the margin rules to destroy the hunt brothers. If it is a rule then it should be applied and how did the drop in the market trigger the increased margin when it did not do so just two years before. It is pretty clear that there is no real rule but what ever they are told to push to benefit the masters.
Tom, I understand you criticism of the specific way in which that unfolded, particularly the questions of Comex piling on with the increases in margin after the decline, based on the mechanical application of the rule tying the required margin to the computed volatility. Nevertheless, history teaches us that after a parabolic increase, there is virtually always a sharp correction, so a correction was to be expected. As I had previously posted here, I sold out well in advance. I sold far too early, and missed the entire last leg of the advance, but it worked out OK.
Your argument holds water pre supercomputer days and programs designed to lay phantom trades on the alleged "free market" in a flash. Or did you forget the flash crash of May 6 2010.
Nice try, with logic circa 1980. This time, the technology makes it different.
Well, I'm a pre-1980's kind of guy, so, what do you expect? In any case, the technology can change the speed, but not the net effect. The "flash crash" was dramatic, but it actually shows the point that while trades can temporarily suppress the price, the price bounce backs and returns where it was.
<<<1. No human organization is that efficient - small conspiracies can work, but the larger an alleged conspiracy must be, the less the chance of it functioning properly. As we can see, the explanations that are given keep requiring an ever-larger conspiracy of bankers, regulators, and politicians, and thus it becomes increasingly implausible.>>>>>
Ever hear of the Manhattan Project?
If not, Google it.
Yes, I've heard of it, but it only lasted a few years, though it did run well, and maintain a relatively high degree of secrecy, though it was pre-internet, and during a time of war. By contrast this alleged conspiracy has been going on for multiple generations, and has no glorious purpose. More typical of contemporary attempts at secrecy was the recent downing of Osama Bin Laden where it was agreed one day that no operational details would be given, but within days many details came out.
BTW, you're not supposed to respond to that post - its supposed to be hidden so that no one will see it or consider the issues I raised.
No human organization is that efficient'
Come on. What kind of efficient does it take to raise margins and put in a massive sell order which puts the market into massive sell. It was done to the hunt brothers. It is not like it takes brains to know if you start a flood you are going to get wet. The entire world of investing took a huge swing in everything and you do not think it has a hand behind it??????? It is very thing that our founding fathers warned us against central bankers.
"The normal banker"...... would be dealing with money that he was responsible for. Today the banker gets to make tons of bets and if he is wrong he is bailed out. There is no normal banker today because you have the pig farm created by the federal reserve.
"The plot makes no sense as far as accomplishing anything useful for bankers."
Really. THey get advanced information to short silver and sell their holdings.
Who do you think is capable of putting in ONE sell order so big as to chock the entire silver market and setting off selling flood that bankrupted thousands. Were do you think that money goes?
It is alleged that the banks are trapped by their short position '
Only a fool believed that. The bank can margin forever and the federal reserve will make sure that money never runs out. One cannot get trapped when their is no ceiling or floor for the banks. It is JP MOrgan that is the guilty party.
What is going on today is the same attack at 2008. The problem today is were have some 15 trillion more in debt because of the insanity of the fiscal people . Greedy low lives that want to take everyones last drop of blood.
'No human organization is that efficient'
Individual acts, an organization could do, but that isn't what is alleged. What is alleged is much larger, a plot going on for multiple generations.
"Today the banker gets to make tons of bets and if he is wrong he is bailed out."
What happens to banks that get 'bailed out' is that they get taken over, and their stock becomes essentially worthless, so the bankers get wiped out, though many employees may keep their jobs with the successor firm. The primary beneficiaries of the "bailout" is that the sanctity of the trade is preserved, so that entire markets didn't implode.
"THey get advanced information to short silver and sell their holdings."
That isn't what the alleged conspiracy is at all. That I could believe. I said so in my post - that there are temporary price manipulations. Instead the allegation is that they are suppressing silver all the time, which isn't possible.
"What is going on today is the same attack at 2008.."
Note that JPM was one bank that was never at risk in 2008 because they did not take on any risk in the home lending fiasco (Collateralized Debt Obligations, CDO's). Based on their financial results, they seem to have done a reasonable job of risk management in their silver trading.
7. According to the normal view of the conspiracy theory, bankers are stupid about the true nature of money, while the common man is smart. Umm, OK. That isn't like anything I've ever heard of happening.
8. If there is such a conspiracy, it has been a total and complete failure. Both silver and silver mining stocks are up 10x in the last decade. Yet, despite the fact that the supposed plot hasn't worked yet, the conspirators supposedly continue to do the same things.
9. It has been alleged recently that the conspirators deliberately prefer to do things illegally when there is no reason they couldn't easily do them legally. Specifically it was claimed that people naked short PAAS when they could short it any time they wanted, perfectly legally. In the real world people aren't going to do something illegally when they can do it legally.
10 Periodically various regulatory and political groups have looked into the claims, and found nothing.
11. Corporate risk management committee were warned about the supposed risk (Bank of Nova Scotia), and the risk management committee and top management looked at the trades and found no risk.
12. Over the long term price suppression, as described by the conspirators is an economic impossibility. Over the long term any group must eventually buy and sell the same quantities, meaning no net effect on the price. Prices can be temporarily suppressed, by selling a bunch of silver, but unless the short position grows larger and large to infinity, they must eventually reach equilibrium where the same quantities are bought as sold. Yes, short term manipulation can and does occur, but long term suppression? Not a possibility.
13. Simpler explanations suffice. Why resort to conspiracy theories when simple explanations suffice. Silver was in nominal deficit in the 90s, but not really, because the amount of silver being unloaded by government and private investors overwhelmed the demand, leading to low prices. Once government sales dried up, and private investors started buying, the price started up, and has continued higher ever since.
Is there a social elite? Sure. Do they really care about the price of silver? I doubt it. If they do, and if they have a conspiracy, the one normally given is unlikely. How about this as an alternative? Suppose that they, like many here, fear a currency collapse. To protect themselves, perhaps they have been buying gold, while convincing the masses to buy silver instead, driving the gold-silver ratio lower than it has been in a long time. Or, as another alternative, suppose they have been manipulating silver higher for the last decade, whetting the appetite of the masses, and in the peak of the bubble the plan is to dump all their silver into the market, only to watch it crash back to earth, while others are left holding the bag?
Am I saying that those alternatives are what is happening? I am saying that in my opinion they are far more likely explanations of what is going on than the commonly given conspiracy theories in that at least they make sense.