Monday, January 17, 2011

Oliver Silverstein
13 January 2011
On December 26, 2009, just a few short days ago, the Wall Street Journal ran a story titled "Price of Silver Soaring."

The title of the story gave no indication that it was just another in an ongoing series of attempts to scare investors away from tangible investments that have intrinsic value, and keep them securely in the realm of the paper Ponzi, also known as the "mainstream U.S. financial markets."

The story starts right off by ignorantly proclaiming, "An unexpected surge in investor demand". Are they kidding? Does everyone who writes for the Wall Street Journal live under a rock? Or maybe the writers have spent the last ten years living in a Brazilian jungle without any contact with civilization?

Who says the demand was unexpected? The writers certainly don't read the pages of this website (but they certainly should and they'd be much, much better informed.)

The bull market in precious metals is now in its tenth year. The Ben Bernanke is debasing the U.S. Dollar with reckless disregard. A retiring CFTC judge admits that they covered up market manipulation. The U.S. Mint is continually setting records for sales of Silver Eagles. And a current CFTC commissioner is making very public statements about silver market manipulation (implied to be by big players such as JPM selling naked silver contracts and artificially keeping the price too low).

If these aren't reasons enough to want to rush out and close your 401k and transfer every cent into silver bullion, I don't know what is. Never mind that Eric Sprott is reporting that silver bullion in quantity is virtually unavailable. Never mind that the COMEX is running out of silver. Never mind that the financial crisis that started in 2008 has not been resolved and that precious metals have a multi-thousand year history as the worlds ultimate safe haven asset.

Unexpected? How can they even claim as much? Investor demand in light of the above factors (and many more) is very much the exact opposite of "unexpected."

As I continued to read this laughable attempt at "financial journalism," I was very thankful that I was doing so very early in the morning, before breakfast. Had I already consumed my morning meal, it most certainly would have come back up when I read the words, "prices are rising despite oversupply."


Come to find out, not only had the authors of this story spent the previous ten years living in a Brazilian jungle without any contact with civilization, but that's where they were actually born. Thus, they are only ten years old, and would have the mindset of a second-grader, had there been schools in the jungle. But there were no schools, so to claim these authors have the mindset of second graders is an insult to second graders everywhere.

Yes, there are rumors coming out of Canada that Ed Steer had to buy a bigger vault to hold his shiny silver bars and coins, since he keeps accumulating them and his original vault could not accommodate any more of this additional supply. But just because Ed's not-so-small vault may not be able to accommodate his personal "oversupply," does not in any way whatsoever mean that there is a worldwide "oversupply" of silver.

When I drive around the country, I see entire neighborhoods of empty homes with for sale signs in front of them, but I have yet to see one single pile of silver with a sign next to it that says "For Sale - Price Reduced."

Besides the esteemed Mr. Steer's vault, where is this oversupply? I dare you to put an ad on Craigslist that says "Wanted: 4 bedroom home. Have cash, will pay full market price immediately." You'll hear from throngs of eager sellers who are desperate to sell the oversupply of homes they currently have in their possession.

Where are these throngs of silver sellers who would jump at the chance to unload their personal "oversupply" of silver? Why aren't they beating down the doors of Eric Sprott in order to dump their "oversupply" on him?

Do readers of the Wall Street Journal actually believe this nonsense? I'd laugh, if it wasn't so darn sad that people fall for this BS.

Ted Butler will eagerly tell you of the declining above-ground supply of silver. He'll confidently point out to you that there is far less silver bullion in the world today that gold bullion.

But who is Ted Butler compared to the idolized Wall Street Journal? After all, the Wall Street Journal relies on well-respected "institutional data," which comes from the likes of the ratings agencies such as Moody's and Standard and Poor's (who did such a fantastic job of giving bundled liar loans "AAA" ratings and absolutely refused to warn investors about the toxic mortgage disaster) not the ramblings of a lone voice in the wilderness (who happens to have been correct all along about silver, and could put the entire team of WSJ writers to shame in ANY debate about the inner workings of the precious metals markets, and probably any other market for that matter.)

So, because the Wall Street Journal would never stoop so low as to rely on any information that has not been spewed by "institutional" origination, I will not point to any statistics that could be provided by Mr. Butler. My sincere apologies to Mr. Butler. (Ted, I'll buy you lunch to make up for it?)

Instead I will simply point to one of the cesspools of "institutional" data that the Wall Street Journal is more than happy to rely on. The (notice the word "institution" is almost fully included in its name, therefore it must be reliable), itself an institutional supplier of investor data (much in the same vein as Moodys: completely willing to keep investors totally in the dark about the true nature of the investments it reports on) lists supply and demand figures for 2009 on its very institutional-approved website.

Total fabrication demand for 2009 is listed as 729,800,000 ounces. And total worldwide mine production of silver for 2009 was 709,600,000 ounces. Obviously, these Wall Street Journal writers are pretty sharp cookies and no longer belong in the Brazilian jungle, because when you take 2009 total worldwide fabrication demand and subtract it from 2009 total worldwide mine supply you are left with an unbearable "oversupply" of negative 20,200,000 million ounces.

At this point in time I had finished my morning cup of coffee and was getting a little hungry. I had to choose between continuing to read this purported "news story" on silver, or eat my morning sustenance.

I skimmed the remainder of the story and found multiple more references from institutional investment banking firms. You know, those bastions of investing savvy, financial transparency, and ethical integrity. The "elite" financial firms that have collectively been given hundreds of billions, no, trillions of dollars of public money just to keep them from failure. The firms that were so darned genius that they'd be out of business if it weren't for the Fed handing them trillions of our dollars.

Obviously, these guys know their stuff, and being relied on by the Wall Street Journal to provide commentary for publication, and being handed trillions of dollars from the Fed is further proof of that fact. After all, when it comes to honest money, there is nobody more revered or worshipped than these guys. If there were such a thing as high priests of honesty, that's what they'd certainly be. They're doing God's work, you know.

Then, in contrast, I thought of guys like Butler and Steer. Guys who just don't have the "institutional" credibility to be given trillions of dollars from the Fed, or to run their personal firms to the point of failure and in need of a bailout.

Who would I trust? Should I keep reading the government-approved, institutional-esteemed silver news story in the Wall Street Journal, and upchuck my breakfast as a result? Or should I close the tab and enjoy my early morning meal in quiet serenity?

The choice I made was of the organic variety, but it wasn't the manure being shoveled by the Wall Street Journal, it was the bacon and eggs.

Oliver Silverstein

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