Guest Post: "Smelly Smoke Signals" by NN-L

Thu, Nov 29, 2012 - 10:27am

Our pal, Ned, has cranked out a very interesting piece regarding the recent suspension, by the LBMA, of the publication of silver forward rates (SIFO). In an effort to give this article as wide of distribution as possible, it is reprinted below.

The most interesting and compelling part of all this is the timing. The LBMA decided to suspend SIFO reporting at the close of business on Friday, November 2. At that exact same moment, some newly-created measures of backwardation such as Sandeep Jaitly's "Basis/Co-Basis" were literally screaming of extreme backwardation and physical tightness. (More details here: The question is: Is there a direct connection here or is this all just a strange coincidence?...and I think you know how I feel about coincidences in the metals markets.

So, what do we know? Well...

  • Massive, recent physical purchases by Sprott, the Royal Canadian Mint et al.
  • Huge drawdowns of silver from SLV and ZKB.
  • Startling day-to-day turnover at bullion bank vaults
  • Highest total silver open interest on the Comex since October 2010.
  • I'll even add this: Tremendous recent price strength in face of blatant capping and manipulation.

What does it all mean? Maybe nothing. Maybe price will continue to languish while we patiently wait for the price to catch up with the fundamentals. Maybe, though, this is the beginning. Maybe we are finally about to see the incredible short squeeze and signal failure which we've all been expecting and was narrowly averted in May of 2011. Maybe we are about to witness something explosive and historic.

Maybe. We'll see. Just BTFD.


(Will edit and load as a scribd in a few minutes.)

About the Author

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Bron Suchecki
Dec 3, 2012 - 1:19am

Answering questions

Tabberto: "if anyone thinks Eric set up his silver trust to fleece the silver investor then they are a total shill"

Strawman, no one I've seen have said that. I think the point VtC/Kid Dynamite were making was that Sprott was selling his PSLV at 20% premium and buying physical while saying physical was hard to get in order to maintain the 20% premium. Not sure about that timing, it may have been him hyping up shortage of silver as part of promoting the then new PSLV, then it went to a silly premium which he took advantage of.

Tabberto: "What about the Sprott GOLD trust boys, doesn't that merit a mention or is that because its Gold its beyond reproach"

No one is saying the Sprott funds don't have the metal, the issue is that there is not much difference in the prospectus wording between them and the other ETFs, certainly not enough to justify 20% premiums.

Tabberto: "a scandalous piece of overt thievery - because it trades exactly at spot despite the costs involved of PROPER gold custody its ok yes?!!"

I'm not sure what the point of it trading at spot "despite" storage costs. The storage costs are paid for by reducing the amount of gold behind each share so of course it appears to trade at spot.

Tabberto: "What about the fact that the shares are borrowed/shorted on a routine issue there?"

Read my article. Did you know you can, and people do, borrow and short PSLV.

Tabberto: "kop a load of Bron's lengthy tome, which plays into the whole 'noone except the twighlight crew can discuss or explain bullion markets properly'."

My article does not say or imply that Andrew Maguire can't discuss the markets. I just address factual errors but also accept some of his other explanations.

Tabberto: "while Andy has successfully been trading metals markets since before our aussie pal sucked on his first vegemite sandwich"

I started work at the Perth Mint in 1994, so that is 18 years and has Andrew as "last 19 years of which have been as a metals specialist". Note it doesn't say "precious metals specialist".

Tabberto: "revisit Jeff Christians radio interview with your mate Erik where he stated that unallocated holders within the LBMA 'probably dont know what that means' and 'its not their metal'"

I know unallocated with a bullion bank is fractional, pointed this out in mid 2010

Ernie Pantusso: "Sprott would be a hypocrite if he had pushed himself the premium high. But the premium went high because of the market dynamic."

I think that is the debate - did PSLV go to 20% premium just because of market dynamics?

Ernie Pantusso: "Bron: your mint buys at spot and sells at premium, as far as I know. Where does the difference lie between you and Sprott?"

If people are stupid enough to pay 20% premium for a fund holding 1000oz bars which should have next to no premium, this is not a good thing. It is not Sprott's fault that people are willing to do that, and I doubt that when he was promoting PSLV he thought for a second it would trade at that premium.

If someone has $120 and buys PSLV (or anything other fund) at 20% then they are only buying $100 worth of silver. It is better for the silverbugs that the $120 is spent on buying $120 worth of physical silver. People buying funds at a premium above the premium physical coins/bars can be bought is nothing to celebrate as it means LESS physical is being taken off the market.

Ernie Pantusso: "About Maguire’s analysis about slv/gld: I’m too idiot to understand the arguments here but since it seems to me that Victor the cleaner Kyd dynamite and Bron Suchecki are trying for ages to defame an honest person like Sprott, call me an idiot but I tend to think Maguire is right"

It is not defamation to discuss facts or differ in opinion.

Motley Fool
Dec 2, 2012 - 10:54am


double post.

Motley Fool
Dec 2, 2012 - 10:53am


"What I do know though, is that unless the precious metals blogosphere gets serious about providing accurate information, without embellishment, then it will forever be treated as a fringe group, never to be taken seriously."

*Golf clap*

S Roche
Dec 2, 2012 - 9:38am

Not so fast, Ned...

Hmmm. I’ve pointed out a few of Ned’s claims in this article do not stand up to scrutiny. They were minor inaccuracies really but, when exposed, they do detract from the conspiratorial thrust of this article.

Now I have found out that the major claim made by Ned, in support of his conspiratorial thrust, does not stand up to scrutiny either. Ned says “Imagine my surprise to note the huge coincidence that his [Sandeep Jaitly’s] much more accurate Silver Basis Co-Basis was screaming into a state of clear backwardation at exactly the same time as the LBMA went dark on SIFO”. This point was picked up by Turd in his introduction and has been emphasized in the comments section as to why this development was a serious attempt by the LBMA to prevent discovery of the true state of the silver market.

The LBMA ceased its free SIFO service on November 2, and announced it on November 5:

However, on November 27 Sandeep Jaitly Tweeted:

Sandeep Jaitly ‏@Bullionbasis

#Silver (& gold) spiked into sharper #backwardation a few days ago. Very interesting...

Hide photo

  Image cannot be displayed

Seeing that Sandeep tweeted on Nov 27 “a few days ago”, that just didn’t sound like Nov 2nd or even Nov 5th to me, so I had The Captain ask him when it occurred via Twitter, and Sandeep replied the spike occurred on November 13th…. not even remotely “exactly the same time the LBMA went dark on SIFO” as Ned claims.

Sandeep Jaitly ‏@Bullionbasis

@CptWillardRtd 13 Nov.

Hide conversation

9:43 AM - 2 Dec 12 · Details

The silver price action on November 2nd, combined with Ned’s assertion that the spike occurred that day, with a spot OTC high of $32.34 and a low of $30.81, was alarming. November 13th, with a spot OTC high of $32.84 and a low of $32.12, not so much.

Now, it may be that the silver market is in backwardation or heading that way, I don’t know. What I do know though, is that unless the precious metals blogosphere gets serious about providing accurate information, without embellishment, then it will forever be treated as a fringe group, never to be taken seriously. I would like to see Ned acknowledge this error.

Dec 1, 2012 - 5:34pm

@Katie Rose

The firstdaycottage site looks VERY interesting. I'll have to add it to my list of possibles.

The current front runner is:

EDIT: I reposted this in 'What A Week'

Going4itKatie Rose
Dec 1, 2012 - 4:00pm

Thanks Katie...

The link to the First Day Cottage site is awesome. Already has me mulling over some ideas.

thurd aye
Dec 1, 2012 - 9:19am

That's not a "playing" card...

  Image cannot be displayed
It is an 8 of Swords from a Tarot deck. Given the meaning of that particular card it was a very appropriate choice to illustrate and article about a fleeing princess.

  Image cannot be displayed

feeling restricted
being fenced in by obstacles staying in a limited situation
feeling trapped by circumstances
experiencing few options
being blind to freedom
feeling persecuted
feeling confused
being unsure which way to turn feeling at a loss
lacking direction
feeling overwhelmed
floundering around
needing guidance and clarity
not understanding what is happening
feeling powerless
waiting for outside rescue
doubting anything you do will help
avoiding responsibility
looking for a white knight
feeling victimized
accepting inaction

"The woman on the Eight of Swords is lost and alone. She can't see because she is blindfolded. She can't reach out because she is bound. She can't move freely because she is caught in a prison of swords. It seems she has wandered far from home - her place of security far away on the hill. How can she get back? She doesn't even know which way to go. The Eight of Swords stands for those times when we feel lost, confused and powerless. Help and relief seems very far away.

Sometimes we feel restricted by circumstances. We wake up one day in an impossible situation. A dead end job. A troubled relationship. Mountains of debt. How did this happen? We have no idea. Even little problems can make us feel trapped. There just doesn't seem to be a way out. Sometimes life seems fine - on the surface. "I have everything I want. I should be happy, so what's the problem?" We just don't know. We're confused and unsure.

In readings, the Eight of Swords is often a sign that you are heading toward (or already in) a situation in which you will feel a lack of freedom and choice. Such situations are tricky because the more you get into them, the more restricted you feel. At each step, your options seem to narrow until you feel completely stuck.

When you see this card, remember that you do have choices, and you do have power. No matter how trapped you feel, you can find a way out if you believe it is possible. The young girl in the picture could free herself. She could wriggle free, tear off the blindfold, and kick down those swords. Solutions are not always easy, but they exist. Find your clarity of thought and purpose (the Swords ideal) and use them to take that first step toward home."

Dec 1, 2012 - 4:25am

GSR went into sharp pulback

GSR went into sharp pulback (pullup) as silver and gold prices dropped, also pulling back some of of silvers acceleration. I think silver will try again to detach from gold, pulling GSR loer again now to 50 and then 48. Now it looks that silver prices at 48 will be 36-37, can happen early as Dec 7th.

I think silver will try once again. The range of the pullup is roughly what could be expected after such sharp move down during previous 3 days . Monday should move GSR down again, Tuesday may be ap a bit, so some consolidation around 51 still possible, But I think yesterdays pullup was it. Silver dropped less than in previous takedown to 32,9.

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

Dec 1, 2012 - 3:27am

South Korea's toilet culture

This had to go somewhere and "Smelly Smoke Signals" seemed appropriate.

Has Turd ever been to S. Korea? Appears they built him a shrine of some sort! ;-)

Slide Show:

Bongo Jim
Nov 30, 2012 - 11:47pm


I definitely know how Carl Spangler feels about them rodents. The wiffer saw them chewing on one of the banana trees and thought it was the wind...but there was no wind at the time. They did exactly what they did to the 14th flag to the lime tree, the bastards!

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