Note that since London closed an hour ago, silver has been going up.

Gartman went bullish on oil this morning so personally, if I was a trader, I’d be expecting it to drift down at the least. This guy really churns his money, or should I say OPM?

Oil is capped currently by a larger than expected inventory build in both crude and refined products.

Below is a response from Bob M. to a piece Bill H. wrote about Bob.

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Bill Holter Wants your $119

Bob Moriarty
Archives
Apr 27, 2016

Bill Holter wants your $119. To earn it he’s going to feed all your fantasies and lie to you. But he will tell you everything you want to hear. That ought to be worth a measly $119 for a full year. Imagine that, all your fantasies fed for chump change.

Bill Holter is a GURU who works with Jim Sinclair. I mention how much attention you need to pay to GURUs in my new book, Nobody Knows Anything. Actually on the page after the dedication page I include a pertinent quote from Matthew 15:13-14 that fits perfectly.

Mr. Holter starts his rant titled “The chances of a Comex default. . .” and goes on to say, “Bob Moriarty of 321 Gold wrote a story with the exact same title …” That’s his first but hardly the last Porky.

My piece was titled “The Chance of a Comex Default. . . is zero” It may sound picky but the verb “is” is singular so the correct word would be “Chance” not “Chances”. Chance is singular and the verb is singular but a good copy editor would have caught that and made Mr. Holter at least use correct English. When you start an article with poor English, you give readers an impression you don’t know how to write.

In his rant Mr. Holter goes all the way from poor English into poor logic. I quote from his piece.

“He then goes on to say “But the chance of a ‘Gold Derivatives Time Bomb,’ is also zero. There is no such thing. And there is no such thing as a ‘Commercial Signal Failure’ or a 400 ounce gold bar made of tungsten.” Is he serious? When well over 100 pieces of paper “call” on the one underlying real ounce …there is no chance of failure? Is he trying to say the commercials can NEVER ever be wrong and forced to cover because they cannot deliver “promised” but non existent gold? Is he trying to say 400 ounce tungsten bars have not already turned up?”

Well, Mr. Holter even though that’s one of the more confusing paragraphs I have read lately, I can answer one question. Yes, as I said in my book, Nobody Knows Anything, even though two different sites with two different writers claimed there were millions of the fake bars produced, in six and a half years not a single gold plated tungsten 400-ounce bar has appeared. Logic would tell you that if it was true, like a Comex default, it would happen. The fact that not a single fake 400-ounce bar has appeared is proof. The fact that while people have been predicting an impending Comex collapse since at least 2001 is proof it won’t happen.

They made it up just as someone made up the “Gold Derivatives Time Bomb,” “Naked Short Sales,” “Commercial Signal Failure,” and “Chances of a Comex Default.”

In May of 2001 on the Kitco forum famed silver GURU Ted Butler claimed that if the US ever got into another war silver was going to go to $50-$100 an ounce. Furthermore, the world only had one billion ounces of silver above ground and was going to totally run out of silver by December of 2001. Silver was going to be so valuable that you should, “never, never, ever sell silver.” In fact he suggested you leave it in your will to your children and they should leave it to their children.

I suspect Ted Butler, GURU and expert, invented the concept of a Comex Default in his letter to the CFTC of October 8, 2001. In any case it’s the earliest use of the term that I can find of the 463,000 pieces Google shows in a search for “Comex Default” or the 279,000 links Bing comes up with. It’s not mentioned in any commodity textbook I have ever read. I think he made it up.

Simple logic would suggest that if people have been claiming since at least 2001 that Comex was about to default 463,000 times, there would have been at least one default. Instead a search for “Actual Comex Default” would show zero links to any piece talking about an actual default that happened. Because it’s never happened.

It just happens to be a slight matter of 6000 years of history in commodity trading that there has never been a single default in commodities. All commodity exchanges have always provided for cash settlement if necessary. Commodity exchanges cannot default. Ever.

People go to commodity markets to hedge production, supply or to speculate. It is not necessary to trade physical commodities. If you really believe that it is mandatory, go buy an S&P future and demand delivery. You can’t, it’s an entirely fictional unit. There are no shares traded ever but it works fine in the commodity markets because you don’t need physical commodities for a commodity market to work just fine. That is unless you are trying to sell subscriptions to the chumps.

If Mr. Holter and Ted Butler want instead to make an argument that since the short position is so large you will never be able to take delivery because there won’t be any silver, they can say that. Butler did in 2001 and managed to pick the absolute bottom of silver in real terms in 5000 years. Not only was there a lot of silver, it was at a low. There was no shortage then, there is no shortage now.

If you want to trade silver or gold based on your fantasies, go for it. Don’t hold your breath waiting for a Comex default, it won’t happen because it can’t happen.

But while Mr. Holter was in his meeting with the Flat Earth Society, he ventured from Fantasy Land into Fiction Land. Again, I quote,

“I do want to point out, this is the same man who said a derivatives blowup can never happen. I think those at Bear Stearns and Lehman Brothers would beg to differ with him!”

This isn’t a Porky. This is an outright lie. So you not only get your fantasies fed for $119 a year, he will tell you all the lies you want to hear. If Mr. Holter doesn’t want to be branded an absolute liar, perhaps he would be willing to link to where I said derivatives couldn’t blow up.

The best article I have ever read about derivatives came from the quiet but brilliant Adam Hamilton in September of 2001. We posted it on our site but since we changed service providers, I can’t post our link. To the best of my knowledge Adam was one of the earliest writers talking about the dangers of derivatives. I didn’t post my first article warning about how derivatives were going to blow the financial system sky high until the end of January 2002.

When I first warned about the dangers of derivatives they were about $100 trillion. In 2003 I warned about the dangers of derivatives again saying, “Banks worldwide have $128 trillion dollars in derivatives and the quality of those derivatives makes used toilet paper look as good as gold.”

By July of 2003 in yet another piece, I said, “But worldwide derivatives in total are above $150 trillion dollars (to give you an idea of how important that number is, the entire world’s economy is only $45 trillion per year.) We have derivatives on derivatives on derivatives. And no one wants them really marked to market or the financial system is going to collapse.”

I’m not sure how many times I would have to write about the dangers of derivatives to our financial world for Mr. Holter to get it. If anything, I have been one of the loudest voices talking about derivatives. It is a total and utter lie for him to say, “this is the same man who said a derivatives blowup can never happen.”

How about August of 2007 when I said, “Right now there is about $460 trillion dollars in derivatives outstanding. Most of these are interest rate sensitive. The $460 trillion dollars is notional value but included in the figure is trillions of dollars worth of fraud. That’s far more money than even the most optimistic central bank or any group of central banks or all central banks together can possibly paper over. Someone must feel the pain for as we remember, all debt must be paid, even fictional debt.”

Or perhaps October of 2007 when I continued, “Derivatives grew wildly out of control starting about 2001 when the stock market should have crashed. Greenspan saved the day by flooding the market with cheap paper. Derivatives were about $100 trillion six years ago and are somewhere north of $460 trillion dollars today. That’s $76,666 per man, woman and tiny tot on earth. It’s out of control and it’s all fraud.”

I kept writing. This came out in November of 2007. “According to figures just released by the Bank For International Settlements, the latest figures show that in a six-month period from December of 2006 until June of 2007, derivatives grew from a stunning $414 trillion to a breathtaking $516.4 trillion dollars. Derivatives grew $102 trillion in only six months. Given that derivatives multiply risk rather than divide risk, the end is near for the world’s financial system. ‘Houston, we have a problem.’”

I have ranted in article after article about derivatives. But if Mr. Holter is too busy feeding his reader’s fantasies about naked short selling or a Comex default to read any of the dozens of pieces I’ve written about derivatives, perhaps he can find someone else who actually understands how dangerous derivatives are. I only know of three people who seem to understand derivatives. That would be Adam Hamilton, me, and a guy named Jim Sinclair.

Every article I have ever written is on 321gold. It might take a few seconds to find a piece by me and click on the archives link but it’s all there for anyone to read. I know Mr. Holter didn’t because like his imaginary Comex default, he simply made up the comment about derivatives and me.

Maybe Mr. Holter could get someone to introduce him to Jim Sinclair. Sinclair knows who does and doesn’t understand derivatives. He also knows about commodities and how they cannot default. I don’t think he would dream of charging people $119 a year just to feed people’s fantasies.

Readers have a simple choice. If you want to read utter drivel and fiction, you can pay $119 a year to hear about things that have never taken place and simply cannot happen. Alternatively you can pay $3.99 a single time to read about the basics of investing and how you can learn to ignore the Experts, Gurus and other fools.

Actually I can understand why Mr. Holter has his panties in a wad. He thought I was writing about him. Imagine that. I guess he thinks he is either an expert, a guru or a fool and has taken great offense.

One of the biggest advantages of writing a book and putting it on Amazon in Kindle format is that the book is dynamic. You write the book in Microsoft Word and can make changes any time you want in a matter of minutes. Once Kindle has accepted your document you can preview it and see other areas you want to change. From the time you make a change until the reader sees the newer version may be a day.

Mr. Holter’s rant made me realize I left something out of the book. I should have warned readers about writers who “guarantee” anything. Since life doesn’t come with any sort of money back guarantee, neither should financial writing. Only guys who are outright frauds guarantee anything.

While Mr. Holter wants the reader to believe that he somehow is offering a guarantee when he said, “The chances (sp?) of a Comex default. . . is guaranteed,” in his title, he should have defined his actual guarantee or admitted that in fact he wasn’t guaranteeing anything at all.

If there is no Comex default in the next 15 years as there has been no Comex default in the last 15 years since Ted Butler made up the term, will Mr. Holter refund all the $119 subscriptions he took in? Somehow I suspect his guarantee is as worthless as his use of English, logic and knowledge of commodities trading.

###

Bob Moriarty
President: 321gold
Archives

321gold Ltd

Copyright ©2001-2016 321gold Ltd. All Rights Reserved

It is pretty sad that the markets are so data dependent!

Can someone please explain why ^VIX is up while its derivative trading vehicles are down? Thanks.