The Jeremiad

143
Mon, Oct 27, 2014 - 7:32am

Back in 1990 my wife and I took a three month trip to Mexico to help decide if we were really called to be missionaries, or merely had a burden to help people. The difference is critical. But while there, I recognized that Spanish speaking people had problems pronouncing my name Jerome. They don’t use the “J” sound in Spanish and the letter “E” is pronounced as a long “A” is in English, and there are no silent letters. So my friend there, a native, suggested I use a Spanish version of Jerome. He suggested Jeremiah or Geronimo (Spanish for Jerome, Goyaałé in Apache). Jeremiah was the prophet that dared to warn Jerusalem about a coming disaster. Well, I chose Jeremiah because it was biblical, and for several months was known as Jeremiah—or “Jeremias” in Español. We were not called to be missionaries, and ultimately satisfied our burden with annual trips delivering medical care to impoverished indigenous people in the Sierra Nevada mountains—ironically the same range where Geronimo found refuge.

But the other day I found myself saddled with the Jeremiah complex. This time it is not simply making my name easier to say. I have been posting short warnings on Facebook (a site which most of my family reads vigorously) about the economic situation. I started the day the “satan signal” appeared. I just thought that was very interesting and people might be curious and open to hear about FED manipulation and the PPT. Each time I begin preaching, I have certain relatives to tell me to stop being a gloom ‘n doomer. (I shouldn’t have had that beer before I sat down to write my last Facebook post). My mother says it makes her sad when I get negative. Other friends do not comment at all, but hit that “like” button each time I mention the weather, tell some outdoors hiking or camping story, or talk about something from my academic research. They like the professor, but not the economic forecaster.

Each time mom mentions my “negativity” about the future, she also reminds me of how well a family friend “Bruce” has done in investing and quotes something profound he says. This week it was this gem: “Stock market volatility is normal.” I like Bruce and he has done very well, but he profited on land speculation in Phoenix in during the boom years, then invested in large apartment complexes. He has done quite well. So that makes him an expert in all things financial, including stock markets. Well at least that is how mom tells it.

I think Jeremiah previously learned the lesson of Jonah. It’s even worse to NOT go tell the truth to someone. But he still found trouble for telling the truth—thrown into a cistern by the king. So I have to keep telling the truth, somehow, in a way that doesn’t come off as doomin ‘n gloomin. I’d like to stay out of the family cistern.

Jeremiah’s life and message has morphed into a speech genre known as the Jeremiad.

"I tell you the truth in Christ, and I lie not. Unless you repent, you will all be damned." --George Whitefield 1740

Its basic structure is to point out wrongdoing, declare it as an affront to justice, and warn of the disastrous consequences if we do not change. This genre of discourse is firmly fixed in the human psyche. Politician use it. Gold bugs use it. Many classic fairy tales and other cultural myths use this structure. Ayn Rand’s fine book was intended for this purpose. I count her as a modern Jeremiah. My mother even preached me her own Jeremiad, warning me that If I continue being negative, I’ll be unhappy and develop health problems.

The solution I see is to reverse the Jeremiad; instead of sin and punishment, speak of mercy and duty. We should thank the Almighty for his mercies—that we have time and insight into the economic problems, that we have a “gift” of low metal prices, lower real estate prices, falling costs on many items as well as cheaper labor to help build and outfit a safe location for future life. We should thank God and then recognize our duty to take action. This site has been a fabulous resource for discussing plans, hearing from people who are raising goats, chickens gardens, even quail, people building greenhouses, solar systems, generators, and other self-sufficiency devices. The forums are here, the expertise is here, a private messaging system is here (all free, I might add). And the regulars on this site are willing to share knowledge, links, and experiences.

You’re right mom, I shouldn’t be so negative, I should get more active. I should take the name of Geronimo and help my clan and friends to resist the evil invaders of our land and keep our way of life, rather than be defeated and relocated to FEMA camps to the reservations where we would depend on the government for our livelihood. Alas, that even in Geronimo’s day, many Apaches chose to support the US government against their own people, and many others sheepishly relocated to miserable reservations at the first request. Not enough followed that inspired leader.

But in this century, the future is not so grim. it is a small minority attempting to control overwhelming majority of the middle class. They must employ propaganda and lies to succeed. The impoverishment of America is also part of the plan—because those living on government largess will resist being weaned from their mama. So we still have a chance to win. Our pb stacking rights will impede government oppression; our right to free speech can keep us encouraged and linked together, perhaps even counter the propaganda barrage—if we can hold onto these rights.

Man of action or talk. Geronimo* was a man of action, Jeremiah a preacher who told the truth. As a professor, I talk too much AND DO TOO LITTLE. I could use more balance in my life. My prepping has been slow and tedious as I am pulled aside to do my job at the university. I have to get my home to a state of self-sufficiency more quickly during this gift of time. We are a year behind schedule now, and I again thank God for the gift of time. But I have to get my hiney in gear, stop spending so much time on Facebook and other blogs (that probably means this one too) and get to work.

As for facebook, I’ll quit writing scary economic warnings there as I have my Friday afternoon beer, and instead write stuff that offers a vision of hope, for those who have ears, and simply invite people to contact me privately if they have economic concerns. If I can be inspired by my namesake, then my actions could make a difference.

I stopped by a website of our old friend yesterday after hearing that he was railing against anyone who suggests that gold is worth owning. Gee, I felt like the guy on Monty Python that wandered into “Abuse” when he just went there for a good argument. Apparently, if you think owning metal is a good idea, and say so, you are a charlatan now, even though many there are gold owners. When I clicked back over to this site, I had to chuckle at Marchas’ dart board. (Edit: The other readers posting in the comments section were polite and fair with me.)

I have been shocked at the pounding the miners are taking. I keep cost averaging in with my retirement account, but this recent beatdown has taken JNUG to half its value of the last time gold touched 1180

I better stop writing and get outside to finish digging and installing the drainage line to collect rain water at the back of the house on this gift of fine, warm, sunny, morning weather.

Well, that’s my view as this morning. Chin up. Do something today that helps you sleep at night.

* Goyaałé (Geronimo is what the Mexicans called him) was a “war shaman” who led a small band of his people in resistance against the US and Mexican government, trying to preserve their freedom and life along the Arizona- Mexico border. They were never defeated, but finally negotiated an honorable surrender. The US broke their promise and shipped Goyaałé and his warriors as prisoners to Florida.

About the Author

  143 Comments

Motley Fool
Oct 27, 2014 - 4:53pm

Alonzo

This is not simply a dollar question, as it is a lynchpin for the whole present system post nixon.

I do expect a hell of a lot yes, but that can be a discussion for a different day.

"If debt is defaulted upon OR inflated away, that's the end of it. The value no longer exists. It doesn't have to 'flow' anywhere except entirely out of existence.

'Value' is a not part of some zero-sum game, there isn't some law of thermodynamics guaranteeing that it be preserved. "

Not accurate.

I will pull an old gedankenexperiment out of my bag.

Consider of a moment we were to freeze time, Hiro Nakamura style. :P

In this moment we take every penny from every pocket, reset all bank balances and credit balances.

A moment later we let time flow again.

What value is lost to the world exactly?

Have buildings been destroyed, capital goods winked out of existence, people died en mass, people forgotten their skills and knowledge, the environment been destroyed, etc?

It is clear that value exists independent of the method of accounting therefor.

Historically whenever a currency has failed, that value has shifted elsewhere.

This time will not be different.

Ps. I am pretty sure the first law of thermodynamics will survive a currency collapse. ;)

Alonzo Jazzberry
Oct 27, 2014 - 5:13pm

Motley

OK - I think you're analogy reveals where you are confused.

Debt has nothing to do with money in people's pocket or bank accounts. That's capital. Debt is leverage, and almost the exact opposite in the context of your example. You have conflated them under the umbrella term of 'value', which does apply to both of them, but only superficially so. Capital, like all physical stores of value, is difficult for the world to 'lose'. If a bank forecloses on a house the house still exists. That's why things with real value are used as collateral.

Uncollateralized debt is a wholly different beast. When it is defaulted upon, the value vanishes from existence (or, if you prefer, never really existed in the first place) and only represents a net increase in risk for the world.

Perhaps this will clarify things: in a currency collapse I totally agree that all value represented by infrastructure, and the properties and talents of the citizens is absolutely preserved. But any value represented by debt does indeed vanish, and it can be catastrophic.

erewenguy
Oct 27, 2014 - 5:16pm

NoMoPoMo

So, does anyone really remember what the world is supposed to look like without the QE brownies we've been hallucinating from?

Dude....

zman
Oct 27, 2014 - 5:22pm

China and the BRIC's have no

China and the BRIC's have no interest in seeing their currencies seek higher value anytime in the near future (5-10 years), they all compete in a very competitive global economy and a weak currency is most desired for emerging economies.

The unbalance of trade is agreed upon by both the developed world and emerging world, this scenario can go on longer than most think. What's the magic number? Debt to GDP of 200%? Maybe 300%

Motley Fool
Oct 27, 2014 - 5:23pm

Alonzo

"Debt has nothing to do with money in people's pocket or bank accounts. That's capital."

No, it's not. Money in people's pockets or bank accounts are a promise of future value. That is debt by definition. A debt owed to you, to be sure, but a debt nonetheless, not capital.

"Debt is leverage, and almost the exact opposite in the context of your example."

Debt is leveraged yes, it is leveraged on the expectation of future value given present circumstances.

My point it simply that such future value, the value of things yet to be produced, does not fail with currency, it does not cease to exist when debts liened against it disappear.

"Uncollateralized debt is a wholly different beast. When it is defaulted upon, the value vanishes from existence and only represents a net increase in risk for the world."

Uncollateralized debt is only without collateral in that it is not attached to specific currently existing physical capital. That does not mean that there is no underlying collateral. The collateral for uncollateralized debts is your credibility, the expectation of your future creation of value.

"But any value represented by debt does indeed vanish, and it can be catastrophic."

Again, the value still exists.

Sure, it is true that at present debt levels represent unrealistic expectation of future productivity, so some of that debt will certainly vanish, but not all of it.

Also it is true that the expectation of future productivity is dependent on the system in which we operate. The current one with its' vast swaths of red tape certainly inhibits potential, and I am of the opinion more potential will be unlocked in future, in a better system, so the value lost of unrealistic expectations may even be exceeded by this( I am of the opinion it will be).

Alonzo Jazzberry
Oct 27, 2014 - 5:36pm

Motley

"Debt has nothing to do with money in people's pocket or bank accounts. That's capital."

No, it's not. Money in people's pockets or bank accounts are a promise of future value. That is debt by definition. A debt owed to you, to be sure, but a debt nonetheless, not capital.

OK, I'm not sure the conversation can progress efficiently if we're being this lazy with terminology. If you are suggesting that a dollar in someone's pocket is 'debt' in the same way as a dollar that has been contractually loaned to another person, then we need a term to delineate the concepts. I essentially have no idea what you've talking about this entire time if that's how broad the definition of 'debt' has become.

Uncollateralized debt is only without collateral in that it is not attached to specific currently existing physical capital. That does not mean that there is no underlying collateral. What is collateral for uncollateralized debts is your credibility, the expectation of your future creation of value.

Yes, yes, YES! You are almost there! Just go one sentence further. If the collateral is credibility (in other words, an estimation of risk), then when the debt is defaulted upon the collateral (or 'value' as you've been saying) is......DESTROYED. It doesn't go anywhere. When Jim loses credibility, Robert doesn't gain it. The universe as a whole has been deprived of a sliver of it's net credit worthiness. From here, it is tautologically true that net risk has likewise gone up. The universe has more risk than it did before, with no benefit of any kind to balance it.

Motley Fool
Oct 27, 2014 - 5:52pm

Alonzo

I am not sure that my terminology warrants such criticism, but yours might.

A debt, simply, is a promise of future value, as opposed to receiving value in the here and now.

It matters not who is owed.

"Yes, yes, YES! You are almost there! Just go one sentence further. If the collateral is credibility (in other words, an estimation of risk), then when the debt is defaulted upon the collateral (or 'value' as you've been saying) is......DESTROYED. It doesn't go anywhere. "

I was there. I have no idea why you are going off into the brambles.

"When Jim loses credibility, Robert doesn't gain it."

Allow me to rewrite this.

When currency loses credibility, Jim does not.

Though a debt liened against his future productivity may lose value in real terms as the currency does, his ability to produce real value in future does not diminish.

Edit : While we are on the topic, I may as well link one of those posts with abyssal gaps in them. xD
https://fofoa.blogspot.com/2012/11/moneyness-2-money-is-credit.html

Alonzo Jazzberry
Oct 27, 2014 - 6:02pm

Motley

A debt, simply, is a promise of future value, as opposed to receiving value in the here and now.

Right, and that's what a loaned dollar is, but not a dollar in someone's pocket. How is an owned dollar not representative of value in the here in now?

Allow me to rewrite this.

When currency loses credibility, Jim does not.

Though a debt liened against his future productivity may lose value in real terms as the currency does, his ability to produce real value in future does not diminish.

As I have already similarly said, the infrastructure, properties and talents of the citizens of a country who has defaulted (or whose currency has collapsed), are preserved. But a currency doesn't 'lose' credibility in a vaccuum. The country as a whole loses that credibility, and it is well and truly gone. I do not think you could find a single example in history of a debt default or currency collapse that was not followed by higher interest rates than those that preceded it. More importantly, the event represented a global increase in risk, however marginal. The credibility lost did not go anywhere, it was just gone until such time as the country could prove it deserved it again.

I should say that I too am optimistic about the future, but only because I do not think such a currency collapse is likely in my life time. If I did, I would not share your optimism about the modesty of it's consequences.

Motley Fool
Oct 27, 2014 - 6:08pm

Alonzo

"Right, and that's what a loaned dollar is, but not a dollar in someone's pocket."

It seems to me you are getting very caught up on semantics, while I am speaking conceptually.

A debt from A to B, is the same as credit from B to A.

Ignore for a moment who stands at either end of that transaction. My point is that the concept itself is the promise of future value.

Sure it may be B to A or A to B , and we can use different terms for those if you like, but that does not change the fundamental nature of the concept. It is merely a matter of perspective, if one wishes to be semantic.

"How is an owned dollar not representative of value in the here in now?"

Can you eat it? Will it provide heat?

Yes, it can be exchanged for an apple or some wood. Now That is real value in the here and now. The dollar itself, remains a promise(to you), until it is transferred to another. Then it is his promise (problem), you have real value.

I will have to leave the discussion here. It is time for me to go.

Alonzo Jazzberry
Oct 27, 2014 - 6:11pm

Motley

"How is an owned dollar not representative of value in the here in now?"

Can you eat it? Will it provide heat?

Yes, it can be exchanged for an apple or some wood. Now That is real value in the here and now. The dollar itself, remains a promise(to you), until it is transferred to another. Then it is his promise (problem), you have real value.

OK, so if that is the definition of 'debt', then a gold coin is also debt because it provides neither heat nor sustenance? How is this a useful definition of debt?

Motley Fool
Oct 27, 2014 - 6:18pm

Alonzo

Yes. Gold is also debt (beyond its industrial utility).

Quality of debts differ though. I would rather have gold debt than currency debt as promise owed to me.

It encapsulates the concept does it not?

How is it not?

Truly though, I must sleep. Good night. :)

buzlightening
Oct 27, 2014 - 6:37pm

Sure the fed fuds will halt QE

just as the silver fix was replaced with more transparency. Central bankstering was designed to work for the EEE in the center. EEE will simply do any and all it does covertly as before.

Very telling qe planned for halt here before the election. Market crash for we the people to come begging at the beast feet for more easy money? Counter with the remaining lose of freedoms. Give it up for security peeps and you can keep your 401k, Ira, Pension, and SS, otherwise it's bailed in to save the system and is gone. You know the two headed political snake will lose the crash to bring down fire on the republiCONs before sworn in. Just another planned freak show coming for the citizens distraction; remaining lose of few freedoms left for safety and security. The EEE keeps the key to our cages and won't let the bogey man devour the shivering free lunch crowd over eaters. 1st to go and will be gone faster than you can say cdc health control. Where have all the homeless gone who lined up for welfare benefits and snap cards. In a much safer place where quarantined, the working ants can continue contributing to the EEE's parasitical life styles of perversion; satanic worship. I've always suspected the lil scamBO health care system, was to conveyor the medicare and social security benefactors into a rapidly diminished population as ashes come out the other end. Oh the relatives will get a nice card explaining the demise of loved ones who hadn't a chance in hell to survive, upon being conveyor'd into the protected EEE elderly genocide machine. This and much more coming. Stay tuned if you're not rounded up at crisis centers for further re-education fema camps. Your education guaranteed or you're dead. Oh if you can't see it coming now you will for certain very much too late and extremely unprepared. So it goes with the masses. Not a chance in hell exploitation comes even unto death and will be unavoidable for those who resist. The rule of law among the lawless rulers.

LifeIsPain ancientmoney
Oct 27, 2014 - 6:53pm

Silver is the wrong treatment for anything...

Colloidal Silver: Risk Without Benefit

Stephen Barrett, M.D.

Colloidal silver is a suspension of submicroscopic metallic silver particles in a colloidal base. Long-term use of silver preparations can lead to argyria, a condition in which silver salts deposit in the skin, eyes, and internal organs, and the skin turns ashen-gray. Many cases of argyria occurred during the pre-antibiotic era when silver was a common ingredient in nosedrops. When the cause became apparent, doctors stopped recommending their use, and reputable manufacturers stopped producing them. The official drug guidebooks (United States Pharmacopeia and National Formulary) have not listed colloidal silver products since 1975.

Dubious Ads

In recent years, silver-containing products have been marketed with unsubstantiated claims that they are effective against AIDS, cancer, infectious diseases, parasites, chronic fatigue, acne, warts, hemorrhoids, enlarged prostate, and many other diseases and conditions. Some marketers claim that colloidal silver is effective against hundreds of diseases.

During 1997 and 1998, Changes International, a Florida-based multilevel company, stated:

Our colloidal silver contains 99.99% pure silver particles suspended indefinitely in demineralized water that kills bacteria and viruses. It can be applied topically and/or absorbed into the blood stream sub-lingually (under the tongue), thereby avoiding the negative effects of traditional antibiotics that kill good bacteria in the lower digestive tract.

An all natural antibiotic alternative in the purest form available. The presence of colloidal silver near a virus, fungi, bacterium or any other single celled pathogen disables its oxygen-metabolism enzyme, its chemical lung, so to say. The pathogens suffocates and dies, and is cleared out of the body by the immune, lymphatic and elimination systems.

Unlike pharmaceutical antibiotics which destroy beneficial enzymes, colloidal silver leaves these beneficial enzymes intact. Thus colloidal silver is absolutely safe for humans, reptiles, plants and all multi-celled living matter.

It is impossible for single-celled germs to mutate into silver-resistant forms, as happens with conventional antibiotics. Also, colloidal silver cannot interact or interfere with other medicines being taken. Colloidal silver is truly a safe, natural remedy for many of mankind's ills. Colloidal silver can be taken indefinitely because the body does not develop a tolerance to it [1].

Seasilver International, a California-based multilevel company, had claimed that American are suffering from "silver deficiency." Although silver is not an essential nutrient, product information posted on the company's Web site several years ago stated:

The depletion of minerals in our soil has left us deficient of silver, one of our most essential trace minerals, causing a drastic increase in immune system disorders in our society in the last decade. Research has taught us that all disease is allowed to manifest itself because of a weakened immune system. In over 20 years of worldwide research on Colloidal Silver, numerous interviews with government agencies, health care practitioners and their patients, no other nutrient, herb or drug (prescription or over-the-counter) is as safe and effective against all known forms of unfriendly virus, bacteria, and fungus. Additionally, while it is generally known that most antibiotics kill only perhaps 6 or 7 different disease organisms, reports have shown that Colloidal Silver has been used successfully in the treatment of over 650 diseases! Furthermore, strains of disease organisms fail to develop in the presence of Colloidal Silver. Colloidal Silver's greatest attribute is its unique ability to function as a superior second immune system in the body! [2]

The ad below is from the July 1996 issue of Alternative Medicine Digest.

Critical Studies and Case Reports

In 1995, an herbal distributor named Leslie Taylor tested nine commonly marketed colloidal silver products available at health-food stores and concluded:

  • Two of the products were contaminated with microorganisms.
  • The amount of silver suspended in solution varied from product to product and would gradually decrease over time.
  • Only five products actually showed antibacterial activity in a laboratory test. To perform the test, she prepared a culture plate with Staphylococcus aureas bacteria, which can cause infections in humans. She then placed a drop from each product on the plate and used disks of two common antibiotics as controls. After eight hours of incubation, she found that bacterial growth had been inhibited around the antibiotics and four of the products.

Of course, the fact that a product inhibits bacteria in a laboratory culture doesn't mean it is effective (or safe) in the human body. In fact, products that kill bacteria in the laboratory would be more likely to cause argyria because they contain more silver ions that are free to deposit in the user's skin.

FDA laboratory studies have found that the amount of silver in some product samples has varied from 15.2% to 124% of the amount listed on the product labels. The amount of silver required to produce argyria is unknown. However, the FDA has concluded that the risk of using silver products exceeds any unsubstantiated benefit [3]. So far, eleven cases of argyria related to silver products have been reported:

  • A 56-year-old man who had sold and used colloidal silver for three years, developed blue/gray discoloration of his fingernails accompanied by a very high blood level of silver [4].
  • A married couple who had three years of daily consumption of a drink prepared by administering an electrolytic charge to a bowl of water that contained a silver bar [5].
  • Another couple had been taking a silver-containing "dietary supplement" prescribed by a naturopath [5].
  • A mentally ill man who had been drinking silver-containing herbal tea for about 10 months [5].
  • Stan Jones, Montana's Libertarian Party candidate for the U.S. Senate, who reportedly started taking colloidal silver in 1999 for fear that Y2K disruptions might lead to a shortage of antibiotics. He made his own concoction by electrically two silver wires in a glass of water [6].
  • Two men, ages 63 and 76, developed argyria after a year of product use inspired by Internet claims [7].
  • A 16-year-old boy developed blue-gray pigmentation of his entire body after ingesting a silver-containing dietary supplement for a year. The product, packaged so that it was identical to bottled water. was touted as a preventive for everyday infections [8].
  • A 58-year-old man who treated a presumed kidney infection with a home-brewed colloidal solution 12 times a day for 4 days developed argyria about 4 weeks later [9].
  • A 38-year-old man developed argyria after ingesting approximately 16 ounces of 450 ppm colloidal silver three times a day for 10 months to treat his arthritis and other conditions. He made the solution with a simple battery-operated chamber that leached silver from pure silver wire. He had obtained the plans from information on the Internet [10]. The photograph to the right shows how his skin color compares to that of normal skin.


Enforcement Actions

Between October 1993 and September 1994, the FDA issued warning letters to five colloidal silver marketers::

  • Higher Education Library Publications (H.E.L.P.), of Springfield, Utah, was ordered to stop claiming that its colloidal silver product was effective as a natural antibiotic and might be effective against cancer, genito-urinary diseases, tuberculosis, and AIDS.
  • Nutrition, Inc., of Arvada, Colorado, was ordered to stop stating or implying that its Silvicidal, when administered orally or intravenously, was nontoxic, FDA-approved, and was a broad-spectrum antibiotic that killed bacteria and all virus and fungal infections. In addition, it was falsely claimed to be effective against a long list of specific diseases.
  • Reseau International of Cincinnati, Ohio was ordered to stop claiming that its colloidal silver product was a "natural antibiotic and anti-inflammatory immune system stimulant" and that it was effective against cancer, staph, strep, influenza, general body infections, inflammation, impaired immune system, fungus toxicity, tonsillitis, Meniere's symptoms, whooping cough, shingles, syphilis, cholera, and malaria. The labeling also stated that colloidal silver could cause major growth stimulation of human tissues and can regenerate
  • Silverado Inc., of Bountiful, Utah, was warned to stop making false claims that its colloidal silver product was effective as an antibiotic, anti-inflammatory, anti-viral, and anti-fungal agent and that it could stimulate the immune system.
  • Unic, of Carmichael, California, was ordered to stop claiming that its colloidal silver product was effective against many diseases and could heal burn-damaged tissue without scarring.

In October 1996, the FDA proposed to ban the use of colloidal silver or silver salts in over-the-counter products [11]. A Final Rule banning such use was issued on August 17, 1999 and became effective September 16th. The rule applies to any nonprescription colloidal silver or silver salt product claimed to be effective in preventing or treating any disease [12]. Silver products can still be sold as "dietary supplements" provided that no health claims are made for them. During 2000, the FDA issued warnings to more than 20 companies whose Web sites were making illegal therapeutic claims for colloidal silver products.

In 2000, the Federal Court of Australia banned Vital Earth Company Pty Limited and its director Darryl John Jones from falsely representing that the colloidal silver produced by their "Vital Silver 3000 Zapper," "Vital Silver 2000 Automatic" and "Vital Silver 2000":

  • Can kill all disease-causing bacteria, fungi and virus within six minutes of contact
  • Has no harmful side effects; that colloidal silver could be used as an antibiotic for all the acquired diseases of active AIDS
  • Is effective with more than 650 different pathogenic bacteria and virus types
  • Has been used successfully against diseases including AIDS, cholera, diabetes, leprosy, leukemia, lupus, skin cancer, syphilis and whooping cough.

The company was also ordered to pay AUS$9000 in costs and to provide refunds [13].

In 2001, the FTC obtained consent agreements with two companies:

  • Robert C. Spencer and Lisa M. Spencer, doing business as Aaron Company (Palm Bay, Florida). Colloidal silver has been medically proven to kill over 650 disease-causing organisms in the body and is effective in curing diseases ranging from cancer and multiple sclerosis to HIV/AIDS [14].
  • ForMor, Inc., doing business as ForMor International, and its president, Stan Gross (Birmingham, Alabama) agreed not to make unsubstantiated claims that colloidal silver is effective in treating over 650 infectious diseases, has no adverse side effects, and is effective against arthritis, blood poisoning, cancer, cholera, diphtheria, diabetes, dysentery, gonorrhea, herpes, influenza, leprosy, lupus, malaria, meningitis, rheumatism, shingles, staph infections, strep infections, syphilis, tuberculosis, whooping cough, and yeast infections [14].

In 2002, the FTC obtained a consent agreement with Kris Pletschke, doing business as Raw Health, agreed to stop making unsubstantiated claims that its colloidal silver product could treat or cure 650 different diseases; eliminate all pathogens in the human body in six minutes or less; and is medically proven to kill every destructive bacterial, viral, and fungal organism in the body, including anthrax, Ebola, Hanta, and flesh-eating bacteria [15].

In 2002, the Australian Therapeutic Goods Administration amended its rules so that water-treatment products containing substances like colloidal silver for which therapeutic claims are made must meet the requirements of medicines included in the Australian Register of Therapeutic Goods. This means that such products can no longer be legally marketed without proof that they are safe and effective for their intended purpose. The amendment was based on clnclusions that:

  • There is little evidence to support therapeutic claims made for colloidal silver products;
  • The risk to consumers of silver toxicity outweighs the value of trying an unsubstantiated treatment, and bacterial resistance to silver can occur
  • Efforts should be made to curb the illegal availability of colloidal silver products, which is a significant public health issue [16].

References

  1. Product brochure. Changes International, 1997. Downloaded in 1998.
  2. Seasilver International Product Information, accessed October 12, 1998.
  3. Fung MC, Bowen DL. Silver products for medical indications: risk-benefit assessment. Journal of Toxicology and Clinical Toxicology 34:119-26, 1996.
  4. Gulbranson SH and others. Argyria following the use of dietary supplements containing colloidal silver protein. Cutis 66:373-374, 2000.
  5. Hori K and others. Believe it or not—Silver still poisons! Veterinary and Human Toxicology 44(5):291-292, 2002.
  6. Blue Is the color of my candidate's skin. Associated Press, Oct 2, 2002
  7. Cohen LE and others. Effects of Internet quackery: Argyria in the silver state. Federal Practitioner 21(4):9-17, 2004.
  8. Wickless SC, Schwader TA. Medical mystery—The answer. New England Journal of Medicine 352:2349-2350, 2004.
  9. Brandt D. Argyia secondary to ingestion of homemade silver solition. Journal of the American Academy of Dermatology 53:S105-107, 2005.
  10. Wadhera A, Fung M. Systemic argyria associated with ingestion of colloidal silver. Dermatology Online Journal 11(1):12, 2005.
  11. Federal Register 61:53685-53688, 1996. (To access this document, search the 1996 volume for "colloidal silver.")
  12. FDA. Final rule: Over-the-counter drug products containing colloidal silver ingredients or silver salts. Federal Register 64:44653-44658, 1999. Download PDF version
  13. Refunds for buyers of alternative therapy devices. News release, Australian Competition and Consumer Commission, May 5, 2000.
  14. "Operation Cure.All" wages new battle in ongoing war against Internet health fraud. FTC news release, June 14, 2001.
  15. FTC announces first two enforcement actions against purveyors of bioterrorism defense products. FTC news release, Feb 27, 2002.
  16. Regulation of colloidal silver and related products. Therapeutic Goods Administration Web site, Aug 19, 2003.

For Further Information

Rosemary Jacobs, an argyria victim, has made a detailed study of the colloidal silver marketplace and is willing to rjstan[at]together[dot]net (answer questions).

(from Quackwatch)

Occasnltrvlr
Oct 27, 2014 - 6:56pm

Forget The Skin!

Look what it did to their eyes!!

Jeremiah Jr
Oct 27, 2014 - 7:27pm

@DJ

Great post !

From someone with an actual Jeremiah'an Spirit myself.

Tough questions indeed, Thanks for your thoughts.

Jeremiah 6:14 & 8:11

Mantis
Oct 27, 2014 - 7:40pm

Great thread

Mike Maloney talks about a great wealth transfer when the ponzi fiat system collapses. Sounds similar to what Motley is referring to to me.

@DrJerome your experiences with your family and friends is very familiar to me. If I dare to start mentioning money as debt or any such things it provokes quick subject changing or embarrassed silence. In my experience people don't want to hear it and worry about you if you keep on about it. I've left facebook don't miss it.

Alonzo Jazzberry
Oct 27, 2014 - 7:40pm

Well there's the problem

Yes. Gold is also debt (beyond its industrial utility).

Motley - it's perfectly fine for you to personally have some definition of the word 'debt' that includes gold bullion that one physically holds. I could probably undertake some mental gymnastics to interpret the definition of debt in such a way if I put my mind to it. However, conversation between two human beings is fundamentally dependent on a shared vocabulary, so in order for you to be understood it is essential that you stick to common usages of words or explicitly clarify when you deviate from them.

Our conversation has been a case in point, consisting mostly of my trying to figure out what the heck you were trying to say.

I know you've put a lot of effort into gaining the understanding of economies that you have, and I know the allure of wanting to flaunt that knowledge in a succinct and impressive way. But any fool can be obscure, a more laudable goal is to be understood.

Kerbouchard
Oct 27, 2014 - 7:42pm

Tune In, Turn On, & Drop Out

And that's all I have to say about that!

Safety Dan
Oct 27, 2014 - 7:53pm

Lifeispain, no wonder your

Lifeispain, no wonder your name 'handle' fits so well. May I suggest you check with your local medical doctor to discover what PubMed is and means? Then together read these studies....

This study performed and compiled by National Center for Biotechnology Information, U.S. National Library of Medicine. It provided 88 different studies at this link of Nanosilver particles in medical applications: synthesis, performance, and toxicity:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4037247/

From the study:

Abstract:

Nanosilver particles (NSPs), are among the most attractive nanomaterials, and have been widely used in a range of biomedical applications, including diagnosis, treatment, drug delivery, medical device coating, and for personal health care. With the increasing application of NSPs in medical contexts, it is becoming necessary for a better understanding of the mechanisms of NSPs’ biological interactions and their potential toxicity. In this review, we first introduce the synthesis routes of NSPs, including physical, chemical, and biological or green synthesis.Then the unique physiochemical properties of NSPs, such as antibacterial, antifungal, antiviral, and anti-inflammatory activity, are discussed in detail. Further, some recent applications of NSPs in prevention, diagnosis, and treatment in medical fields are described. Finally, potential toxicology considerations of NSPs, both in vitro and in vivo, are also addressed.

From Africa:

Using Nanosilver for Ebola

https://www.prweb.com/releases/2014/10/prweb12264647.htm

https://standardtimespress.org/?p=5520

Recently a 2007 test was reaffirmed in Ghana on 79 Malaria victims. All 79 were given nanosilver for the Malaria. 90% of them recovered in 24 hours and the remaining 10% recovered in 48 hours. There are many more studies on Nanosilver, Google it.

Remember Nanosilver is not a drug. Its a food supplement that happens to have many studies proving its abilities. Its used by the US Military and various hospital in different forms across the USA and other countries. How many turned blue?

NanoSilver is a product that was created about 10 years ago. It is not ionic silver or the older versions of colloidal silver. It has many more particles of silver per fluid ounce, as described in the site linked below. The company manufacturer is American Biotech Laboratories or ABL. There is a sister company ABL Medical, that sells only pharmacy grade products that information can be found on the internet. Those products are mostly sold to various hospitals in the US.

www.ablsilver.com | American Biotech Labs talks about each of their Silver Solution products. Visit our website for more details. https://www.youtube.com/watch?v=2e4fAFsPK4w

Btw, if silver is wrong for any medical use.. better go tell 99% of the US hospitals that use silver nitrate drops for newborn babies to immediately cease and desist. In fact attempt to get a court order based on your facts listed above.

Do you know the medical treatment for STD's prior to Big Pharma's antibiotics? Silver nitrate flushing to the bladder.. How many died or turned blue from that procedure?

Using Silver Solutions and The Risk of Argyria

Introduction

Humanity has had a love affair with silver for thousands of years. Historically the precious
metal was used in medicine, eating utensils, plates, cups, food containers, jewelry, money/coins,
clothes, building materials, and as a disinfectant for water and human infection. Silver has
historically touched almost every facet of life for those who could afford it. Now, after hundreds
of years of study and significant gains in knowledge, science and technology, silver is still used
for medicine, eating utensils, plates, cups, food containers, jewelry, money/coins, clothes,
building materials, and as a disinfectant. It remains an important part of our lives because of the
extensively time tested utility of the metal. It is safe to say that silver is being used in some way
every day by almost every man, woman, or child in the civilized world.


Can Silver Cause Heavy Metal Poisoning Or Toxic Nephropathy?

As of late, many doctors, scientists, and now the media, have been claiming that silver is a
problem because it is a heavy metal, and as such can poison the body. The problem is not with
the silver but with the misinformation and inaccurate knowledge being spread by the people
speaking about silver. The real answer is that silver is not toxic when used at reasonable levels
and quantities. Any substance, even water, in excessive amounts can be fatal. Toxic nephropathy
or heavy metal poisoning is defined as, “Any functional or morphologic change in the kidney
produced by an ingested, injected, inhaled, or absorbed drug, chemical, or biological agent.

The MERCK Manual is sometimes referred to as the “Scientific Bible of Diagnosis and
Therapy” by many scientists and doctors. Silver is not listed in the manual for causing heavy
metal poisoning, because it does not cause it
. (See MERCK manual (17th Edition, Pg 1880, table
226-1, third item listed, for the full list of heavy metals that cause toxic nephropathy)).

In a peer-reviewed paper “Ultradilute Ag-Aquasols with extraordinary bactericidal properties:
the role of the system Ag-O-H2O.” (Materials Research Innovations, vol. 11, no. 1, (2007)
pages 3-18) on the subject of the safety of consuming metallic silver, the paper states (page 1,
first paragraph of the introduction), “A recent paper by Das et al. Provides the remarkable datum
that some 275,000 kg [(605,000 pounds)] of edible metallic silver foil are consumed every year
(in food) in India. No known adverse health effects have ever been recorded. This
epidemiological evidence that silver as a metal is not toxic in any way needs no further comment.
Further support for the obvious safety of consuming metallic silver (Ag0) is in the worldwide
consumption of (so called) silver colloids, often made at home in primitive electrochemical cells
by probably some millions of citizens, again with no ill effects.”

https://www.ablsilver.com/pdf/argyria-risk.pdf

AN IN VIVO HUMAN TIME EXPOSURE INVESTIGATION OF A COMMERCIAL SILVER NANO PARTICLE SOLUTION.M.A.

https://www.ablsilver.com/pdf/ABL-Safety-Study-Abstract-Human-Ingestion2...

LifeIsPain Safety Dan
Oct 27, 2014 - 7:54pm

Regarding nanosilver

I read the article you referenced, Safety Dan, and yes, nano silver has some uses in the medical field topically, e.g., wound dressings, etc. It's long been know that in vitro silver has anti-bacterial and antiviral properties. The question is, does it have much use in vivo? The problem is, there haven't really been any good controlled studies. As your own article points out:

There is a limited number of well-controlled studies on the potential toxicities of nanosilver, though these studies tend to suggest that NSPs can induce toxicity in living beings. It should be noted that in vitro conditions are drastically different from in vivo conditions; however, longer-term studies and assessment of NSP toxicity must be conducted so that NSP exposure does not exceed toxic levels.

As for that African study on malaria, would you really trust your health to a Ghanan witch-doctor?

LifeIsPain Safety Dan
Oct 27, 2014 - 8:20pm

Liberia classifies nano silver as a pesticide; won't use it

Not So Fast: Ebola Trial Drug Trumpeted in Liberia is ‘Pesticide’

Written by FPA Staff Report

Published: 18 August 2014

Monrovia – A trial drug introduced in Liberia as a possible cure for the deadly Ebola virus is nothing more than a pesticide which was recently rejected by health authorities in Nigeria.


A group under the banner Concerned Citizens of Liberia chaired by Mr. Nathaniel Blama a Montserrado County Senatorial candidate told a news conference last weekend that it had secured a Product “Nano Silver” that they feel can be used to deactivate the Ebola Virus if given to a patient of Ebola.

The group claimed that it had found a solution for the Ebola virus that has killed hundreds of people they discovered a Nutrient call Nano Silver. Blama said: “Nano Silver, from our research, has shown that it has the power to cure lots of illnesses and diseases, including the ability to deactivate the Ebola Virus.”

The Nutrient according to Blama is made up of crystal mineral water and Macro Particles of refined silver. The Nutrient, he said, is nontoxic, self-sterilizing and inexpensive and does not require refrigeration and is being manufactured in the United States of America and has been in circulation since it was first discovered in 1994 by the department of defense in the USA.

“Dr. Rima E. Laibow, medical director of the Natural Solution Foundation has had a long history with the Nano Silver and has used it to cure highly chronic and infectious diseases. She, however learned from classified research that indeed Nano Silver has the potential of deactivating and neutralizing the Ebola virus,” Blama said.

But FrontPageAfrica has now learned that the drug has been rejected by the Nigerian government, which had initially struck a deal to accept Nano Silver solutions to treat Ebola from a yet to be named “Diaspora Nigerian” who claimed to have “invented” Nano Silver. Nigeria rejected the drug after the US Food and Drugs Administration has stated that the Nano Silver solution being paraded in Nigeria as a cure for Ebola is classified as a pesticide.

Prof. Onyebuchi Chukwu, Nigeria’s minister of health later abandoned the use of Nano Silver donated by the unnamed Nigeria because an independent assessment showed Nano Silver can’t treat Ebola. Chukwu noted that Nano silver will not be administered to Ebola patients because it did not meet required standards. The Lagos state government has also issued a similar statement denouncing the drug.

“You will recall that last Thursday, I announced that we were ready to deploy an experimental drug, Nano Silver, if it was cleared by the national health research committee. Although, the drug had since last Thursday been made available to the emergency operation in Lagos, it had not been administered to any patient, because we were awaiting clearance from the national health research ethics committee."

"I regret to inform you that the drug did not meet the requirements of the national health research ethic code. Accordingly, approval for its use was withheld. I wish to inform you that another candidate drugs are currently being evaluated by the Treatment Research Group for EVD. As soon as any of the experimental drug is cleared and made available, we shall include it in the treatment regimen subject to the informed consent of the patient.”

The minister told a news conference in Lagos last week that the drug was recommended by some experts and that the government remained open to any solution aimed at tackling the virus. “Nano silver was recommended to the government and we did not just accept it, but subjected it to evaluation,” he said.

Despite Nigeria’s rejection of the drug, the concerned Liberian group is trumpeting the drug as a proven cure, “convinced beyond all reasonable doubts that the safe, non-toxic, inexpensive nutrient, Nano Silver, with its potent characteristic is a curative for Ebola virus.”

Over the past four months, 2,127 people have been infected with the virus in West Africa, of whom 1,145 have died. Ebola, which is transmitted through direct contact with the blood or body fluids of infected people or animals, causes serious hemorrhaging and can have a 90 percent mortality rate.To date only the ZMAPP has been used as a clinical trial in Liberia.

Last week the government received the first three doses of the Drug Z-Mapp, which was brought into the country via a Delta Airline Flight accompanied by Foreign Minister Augustine K. Ngafuan. The drug has been administered to two Liberian doctors Zukunis Ireland and Abraham Borbor and Dr. Ireland is said to be well and has left the isolation center.

Safety Dan
Oct 27, 2014 - 8:45pm

Lifeispain

Old stuff, check this out:

https://www.prweb.com/releases/2014/10/prweb12264647.htm

https://standardtimespress.org/?p=5520

Still didn't answer my question from above..

Safety Dan LifeIsPain
Oct 27, 2014 - 8:47pm

Lifeispain

First of all please read this:

AN IN VIVO HUMAN TIME EXPOSURE INVESTIGATION OF A COMMERCIAL SILVER NANO PARTICLE SOLUTION.M.A.

https://www.ablsilver.com/pdf/ABL-Safety-Study-Abstract-Human-Ingestion2.6.13.pdf

Next, when was the last time you visited a country outside the USA? I guess you don't think anywhere but the USA has 'real' doctors? My mother survived Dx Malaria in WWII due to a Chinese 'witch doctor' herb treatment due to the lack of meds. May I suggest caution throwing mud at another countries doctors?

Oh, you might check with your local hospital for open heart surgery. See if they now require a bag of nanosilver opened and applied prior to closing. That sounds like topical use, doesn't it?

My question - if you or yours gets Ebola.. Are you going to not take Nanosilver cuz ur scared ur skin's going to turn blue and risk the recovery?

SilverRunNW
Oct 27, 2014 - 9:06pm

@Safety Dan

While I agree that nano or ionic silver is very beneficial, your 2 references are more like advertisements for Dr. Rima. And her site says that her silver is different, unlike our favorite home brews which is very questionable. She uses scare tactics, which I do not like. My opinion, Dr Rima is a terrible reference to use for a pro-silver opinion.

SilverRunNW
Oct 27, 2014 - 9:39pm

@Dan

Others fail to accept studies of the DOD and other studies listed above. They want info from ground zero. I put the Merk manual info in the very first post above.

If you have a better suggestion, fire away..

Your other references were awesome! I should have pointed that out in my previous post. Sorry!

Safety Dan SilverRunNW
Oct 27, 2014 - 9:41pm

@ SilverRunNW

I never condone scare tactics or fear-mongering. While she does sound like a billboard, she still has facts.

Its as simple as this.. which would you rather have, her self profit center advertisement and facts or no facts? Don't like the advertisement? Ignore it.

Btw, last time I looked at Dr Rima's site, she sold Silver Solution, manufactured by ABL. Its not 'her product'. That might have recently changed.

Ebola and other hemorrhagic fever virus will likely affect 3rd world countries populations to a greater degree than the US populace, (as they do now). In the past I've read Ebola kills the host too quickly to be the 'most effective' bio weapon. Now I see it lives outside host for up to 28-50 days, depending on the study. Still, Ebola virus is likely more contagious in cooler, less humid areas. That would tend to get me to take action. I live in a 3rd world country, and have little concern about Ebola, because I've read and researched, though no first hand [Ebola] experience.

Others fail to accept studies of the DOD and other studies listed above. They want info from ground zero. I put the Merk manual info in the very first post above.

If you have a better suggestion, fire away..

Green Lantern
Oct 27, 2014 - 9:46pm

Some Humor with the same amount of truth

SOCIALISM
You have 2 cows.
You give one to your neighbour

COMMUNISM
You have 2 cows.
The State takes both and gives you some milk

FASCISM
You have 2 cows.
The State takes both and sells you some milk

NAZISM
You have 2 cows.
The State takes both and shoots you

BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then
throws the milk away

TRADITIONAL CAPITALISM
You have two cows. You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income

ROYAL BANK OF SCOTLAND (VENTURE) CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States , leaving you with nine cows. No balance sheet provided with the release.
The public then buys your bull.

SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.

AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to
produce the milk of four cows. Later, you hire a consultant to analyse why
the cow has dropped dead.

A GREEK CORPORATION
You have two cows.
You borrow lots of euros to build barns, milking sheds, hay stores, feed sheds, dairies, cold stores, abattoir, cheese unit and packing sheds.
You still only have two cows.

A FRENCH CORPORATION
You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.

A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called a Cowkimona and
market it worldwide.

AN ITALIAN CORPORATION
You have two cows, but you don't know where they are.
You decide to have lunch.

A SWISS CORPORATION
You have 5000 cows.
None of them belong to you.
You charge the owners for storing them.

A CHINESE CORPORATION
You have two cows.
You have 300 people milking them. You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

AN INDIAN CORPORATION
You have two cows.
You worship them.

A BRITISH CORPORATION
You have two cows.
Both are mad.

AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none. No-one believes you, so they bomb the ** out of you and invade your country.
You still have no cows, but at least you are now a Democracy.

A ZIMBABWEAN CORPORATION
You have two cows.
The black one takes your farm.

AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good. You close the office and go for a few beers to celebrate.

A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive...

Safety Dan
Oct 27, 2014 - 9:53pm

@ SilverRunNW

No problem. I guess I still have a bit of that shell shocked syndrome from Iraq & Afghanistan..

Occasnltrvlr
Oct 27, 2014 - 9:53pm

Hmmm... I'll Have to Think About This...

Ashen skin; organs turning to putrid mush...ashen skin; organs turning to putrid mush...

Hmmm, tough one, this.

Edit: Sorry, Mr. Dan, I now see you addressed this thought previously.

erewenguy
Oct 27, 2014 - 10:07pm

Gold and silver getting a

Gold and silver getting a little jinky tonight. Sure. Why not. Make up for today's boring action.

Some additional information on the LME copper stocks :

Somebody Owns a Lot of Copper

15 Oct 27, 2014 3:51 PM EDT

By Matt Levine

...

Here is a story about copper:

A single buyer has snapped up more than half the copper held in London Metal Exchange warehouses, giving it control over a crucial source of supply and raising concerns among traders about the potential for higher prices.

On several occasions in the last month, this buyer held as much as 90% of the world’s copper stored in LME-licensed warehouses, equal to about 140,000 tons, or enough to make the copper parts of the Statue of Liberty more than 1,700 times.

The Wall Street Journal reports that the single buyer is rumored to be Red Kite Group, "a London hedge-fund manager that focuses on metals trading." Whoever it is seems to have held more than 50 percent of LME stocks for most of the last four months. This is unusual, and sort of creepy. When one person owns 50 or 80 or 90 percent of the supply of a commodity, people tend to throw around words like "cornering the market," and worry about higher prices and manipulation.

This was a copper mine, but then they took the copper out and put it in warehouses. Or pennies. Or Statues of Liberty.

But then there is that number. Red Kite, or whoever, owns about 140,000 tons of copper. That's a lot of copper compared to the amount of copper in the Statue of Liberty, or in the LME-licensed warehouses, but it's not a lot of copper compared to the amount of copper in the world. It's a little under three days' worth of worldwide copper production. The world produces one Statue of Liberty worth of copper every two and a half minutes.2 Having one or two thousand Statues of Liberty lying around is not, in that sense, a particularly big deal.

Or put it another way: Red Kite, or whoever, has a little more than one-quarter of one percent as much copper as Freeport-McMoRan. Of course Freeport's copper is mostly in the ground, and Red Kite's is in LME warehouses. "And it's probably easier to get copper out of an LME warehouse than it is to get it out of the ground," you might say, but it's not clear that you'd be right. A famous fact about LME warehouses is that it's really really hard to get metal out of them. In particular, that's the foundation of a famous story about aluminum: that Goldman Sachs and its commodity-trader buddies manipulated the price of aluminum by keeping it in warehouses and not letting it leave except for brief sightseeing tours around Detroit.3 There were long waits to get your aluminum out, so no one could get any aluminum, so Goldman and its cronies could manipulate the price of aluminum higher.

A judge recently rejected this story, and there were a bunch of problems with it. One problem is that the price of aluminum mostly went lower instead while the warehouses were doing their thing. Meanwhile, here's the price of copper over the last four months:

Source: Bloomberg

That is not, all in all, the chart of a commodity that has been cornered. There are some upward moves, especially the big one at the beginning and another one at the end, but the trend for most of the last four months has been down. You don't buy up all the copper in the world and then push its price down.

But Red Kite, or whoever, doesn't own all the copper in the world. It owns a tiny fraction of one percent of the copper in the world. Now, it owns 90 (or 50, or whatever) percent of the copper in LME warehouses. But that is an arbitrary quantity that sounds more important than it is. The LME warehouse system, as we discussed in the aluminum context, is set up to allow people to trade standardized abstract amounts of metal for financial purposes. If you want to hedge or speculate on metal prices, you trade standardized abstract LME contracts underpinned by metal in the warehouses. If you want to make things out of metal, you buy actual metal to be delivered to your factory.

The abstract-metal and actual-metal markets are different markets, but the boundaries between them are porous. When the highest use for a metal is abstraction, a lot of it goes into LME warehouses. When the highest use for it is pennies or beer cans or Statues of Liberty, it comes out of warehouses. From the Journal:

Accumulating such a dominant position became easier in June because the amount of metal under the exchange’s watch had plummeted, as had prices. The warehouses have held less than 160,000 tons of copper since mid-June, compared with more than 360,000 tons at the start of the year. Some analysts say copper production is running behind demand, forcing some users to draw on stockpiles in LME-licensed warehouses.

Loosely speaking, the problem of aluminum was that it was in deep contango: Prices for immediate delivery were low, prices for future delivery were high, and so buying aluminum and chucking it in a warehouse to deliver later was profitable. So people did, and the warehouses got pretty jammed up, and other people who wanted aluminum for immediate use found it all a bit unsporting.

Copper now has the reverse problem. It's in backwardation -- prices for immediate delivery are higher than prices for future delivery -- so there is a tendency to take it out of warehouses and sell it now rather than later. Why pay rent to keep metal in an LME warehouse while it declines in value? Why not sell it now, make more money and save on rent? So the amount in warehouses goes down, and the percentage represented by any fixed amount of copper goes up. If you own some copper in a warehouse, and you keep it there, and everyone else takes theirs out, then you now own all of the copper in the warehouse, though that does not by itself make you an evil market-cornering genius.

That doesn't mean that you couldn't do some evil market-cornering stuff by owning all of the copper in the LME warehouse system: The LME does set the benchmark price, and while it "says that it has mechanisms in place to prevent market squeezes," others quoted in the Journal article express some nervousness about what the big copper owner could get up to. But there are at least some limits: If someone managed to double the copper price on the LME, people would buy copper elsewhere. Or they would move their own copper into the LME warehouses, making the cornering not that effective.

The LME warehouse system is an interesting abstract representation of a commodity market, but you can get into trouble if you confuse it with the actual commodity market. One example of the trouble: Goldman and its cronies were accused of manipulating aluminum prices up by putting too much aluminum in LME warehouses. The worries about copper -- that it could be cornered, pushing prices up -- stem from there being too little copper in those warehouses. Both of those things can't be true.

https://www.bloombergview.com/articles/2014-10-27/somebody-owns-a-lot-of...

Contribute

Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 3/18

3/19 10:00 ET Factory Orders (Jan)
3/20 2:00 ET FOMC Fedlines
3/20 2:30 ET CGP presser
3/21 8:30 ET Philly Fed
3/22 9:45 ET Markit PMIs
3/22 10:00 ET Existing Home Sales
3/22 10:00 ET Wholesale Inventories (Jan)

Key Economic Events Week of 3/11

3/11 8:30 ET Retail Sales (Jan)
3/11 10:00 ET Business Inventories (Dec)
3/12 8:30 ET CPI (Feb)
3/13 8:30 ET Durable Goods (Jan)
3/13 8:30 ET PPI (Feb)
3/14 8:30 ET Import Prices (Feb)
3/14 10:00 ET New Home Sales (Jan)
3/15 8:30 ET Empire State Manu Index
3/15 9:15 ET Cap. Util. & Ind. Prod.

Key Economic Events Week of 3/4

3/5 9:45 ET Markit and ISM services PMIs
3/5 10:00 ET New home sales (Dec)
3/6 8:30 ET Trade Balance (Dec)
3/7 8:30 ET Productivity and Unit Labor Costs
3/8 8:30 ET BLSBS
3/8 8:30 ET Housing starts (Jan)

Recent Comments

by Turd Ferguson, 29 min 3 sec ago
by Turd Ferguson, 32 min 54 sec ago
by Turd Ferguson, 35 min 38 sec ago
by Turd Ferguson, 36 min 16 sec ago