Putting Loincloth on the Naked Bogeyman

[webmaster]

Subject:Putting Loincloth on the Naked Bogeyman
By: Antal E. Fekete

Overview: I started writing this piece as the sub-prime crisis was unfolding. I wanted to establish the connection between the silver basis and the budding banking crisis caused by phony bond insurance schemes and the lack of hedging irredeemable dollar debt with metal holdings. My original title was Putting Clothes on the Naked Bogeyman. As writing progressed I realized that it would take more than one article to dress up the bogeyman; hence the revised title.

Link: http://news.silverseek.com/SilverSeek/1213201099.php

[Richard]

Bleeding to death in the bull ring

It is not in the interest of wealthy individuals, bullion banks, and governments with large stockpiles of silver that the price go to $100 overnight, which could happen if secrecy were breached and anonymity blown away. As they can derive an income from their silver holdings already, these owners of silver prefer a controlled rise in the price. And that’s exactly what we’ve got.

Failure to understand this may lead one to all kinds of superstitious beliefs concerning the power of the bullion banks to manipulate the price of silver. The panicky short covering predicted when silver was trading below $5 never materialized during the run to $20 and higher. There has been and will be a lot of short covering, but nothing what could be called a short squeeze. Not until the curtain falls on the Last Contango in Washington.

Um... Huh?!

Is it me or is there a glaring contradiction in those two paragraphs?

Here's what I mean...

"It is naive to think there is a manipulation in silver, because wealthy people, bullion banks, and government require a controlled rise in price, because they don't want a rapid one to occurr because that wouldn't be in their best interests"

Not that the "naive complainers" being to refered are even complaining, and most certainly not naively ranting about the fact that this price controll must at some point explode to the upside.

[aerobat]

I'd sure like to see Ted Butler respond to this article.

[Argentum]

Been reading a lot of Antal E. Fekete of late and he calls out Ted more than once on some issues. I think they are mostly on the same side of the fence, they just see the grass in different shades of green.

[duneyman]

I have been reading Ted Butler's weekly columns for almost seven years now and the long awaited price explosion has never happened. He's probably right about the manipulation and no one in government or Wall Street has ever challenged him effectively and refuted his arguments - until maybe now. It would be interesting to see what Ted says in response to this article.

[FedFixNix]

Originally Posted by webmaster

Subject:Putting Loincloth on the Naked Bogeyman
By: Antal E. Fekete

Overview: I started writing this piece as the sub-prime crisis was unfolding. I wanted to establish the connection between the silver basis and the budding banking crisis caused by phony bond insurance schemes and the lack of hedging irredeemable dollar debt with metal holdings. My original title was Putting Clothes on the Naked Bogeyman. As writing progressed I realized that it would take more than one article to dress up the bogeyman; hence the revised title.

Link: http://news.silverseek.com/SilverSeek/1213201099.php

I've been reading a lot of Fekete lately, more than I think is healthy. My opinions of him have moved all over the map, from admiration, to respect, to wonder, to suspicion, and to deep distrust.

Deep distrust is where I am now, although I am still sifting evidence, and trying to gain a better understanding of how he reads the basis like soothsayers claim to read tea leaves.

A lightweight he is not. This is a very learned man. But then so were the Rothschilds, Warburgs, Morgans, Rockefellers, and all the other international central bankers who now run the world, and are continuing to bankrupt the United States.

All very smart men indeed. Hitler and Stalin were smart men too, as was Napoleon. Smart men who have warped morals and aren't hindered by scruples can do amazing things, seemingly perform magic or miracles, transform nations and societies on a massive scale, affect the course of history - for better or for worse.

I think we can learn something from this contest of viewpoints between Butler and Fekete, if we take the time to learn from it, and listen to what is really being said, and digest it all thoroughly.

Though it may not seem relevant to some, it is analogous to the conflicting points of view between Thomas Jefferson and Alexander Hamilton during the birth of our nation 230 years ago. Both were brilliant men. Both held strong and conflicting viewpoints about the role of money and banking in our fledgling nation. However, one view was that of the international central bankers, and one was that of a free and independent sovereign people. These views were so strong, divergent and irreconcilable as to become the basis for the formation of the two-party system. History records who won the contest. It has not yet recorded how much the people have lost.

Right now, I think Fekete is using brilliant and little-understood financial sophistication to blur the truth about the market manipulation that is so obvious to those who have eyes to see. That is more gut instinct than I'd prefer, and I hope to get a better handle on this with time and study.

But that's my first guess for now. John Perkins was an "Econonic Hit Man" (Read the book, if you haven't already done so) and I think Fekete is more of an intellectual hit man. I think they both work(ed) for the same financial powers-elite.

However, let me hasten to add that most of Fekete's arguments are beautiful, seemingly rational, and plausible... up to a point. It;s just that on close examination they don't hold up. They have flaws. They do not account for all that he claims they explain.

More when time permits.

I am also interested to see how Ted responds. I think he is wisely taking his time to sift through Fekete's arguments and how best to respond.

Ted's biggtest problem, like that of all of us, is that Fekete will not disclose his so-called basis secrets except by a long drawn out series of paid seminars held in remote areas of the world. This means that neither Ted, I, or anyone else trying to understand how "basis" can explain how market price can move contrary to all known supply-demand principles is at an extreme disadvantage.

"Well you can't understand my logic about how "basis" can explain these market anomalies that you blame on "naked shorts" because you haven't taken my exclusive secret course on basis yet". That, or something very similar to it will be at the bottom of everything Fekete will have to say on the issue.

It's not very dissimilar to Alan "What did he just say" Greenspan spinning out his incomprehensible economic mumbo-jumbo to congress for decades. He got away with it because nobody wants to appear so stupid they can't understand him, and so they act as if they do.

Well, from what I can understand now, the emperor is as naked as a jaybird, and I'm talking about emperor Greenspan and emperor Fekete.

I admit I know diddley squat about reading the basis tea leaves, but its odds on that if I was the world's basis guru, like Fekete claims to be, I think it would be clear to me that even if basis is part of the naked short story, its not the whole enchilada.

That my two cents for now. I'm sure Ted can do much better when he gets around to it.

FedFixNix

"All of the perplexities, confusion, and distress in America arises, not from the defects of the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation." -- John Adams, Founding Father

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance." - President James Madison

"You [central bankers] are a den of vipers and thieves and I intend to rout you out, and by the eternal God, I will rout you out. If Congress has the right to issue paper money, it was given them to be used by themselves, and not to be delegated to individuals or corporations.." -- Andrew Jackson's address to Congress 1829

"I believe that banking institutions are more dangerous to our liberties than standing armies." - Thomas Jefferson.

[pkrebaum]

I wouldn't want to be on the short side of a rising market, no matter what the "basis" was.

Here's an interesting, but very complex, book on futures trading. File size is about 4 megabytes.

http://www.me.iitb.ac.in/~pravar/Tra...0Fu tures.pdf

Here's a doctoral thesis on the dynamics of the COT reports. Again, about 4 megabytes. Note that for silver and gold the sentiments of the small traders more accurately predict the market than the rest. Also, tons of info in the appendix, and on the CFTC.

http://www.bet.hu/data/cms88000/Diss...esdolgozat.pdf

[Richard]

WHOA wait a minute! I think Jason Hommel already refuted this article, or rather it's general idea....

Mr Fekete starts off by talking about how futures trading works, using grain as an exmaple. In that regard, futures trading is valid. We want there to be (more or less) a guarenteed profit that may or may not be there when trading by price. This in turn encourages producers to produce, the end result being an abundant production to meet existing and growing demand for that profit.

But...

This can not work on gold and silver, because gold and silver are NOT commodities. They are MONEY. That means they are going to be (relatively) scarce no matter what. That's what makes money money: Relative scarcity. But since just labeling them as commodities and trying to treat them as such doesn't have the price-lowering/higher expected production effect it should, they require manipulation in order "behave right".

I'm not certain professor Fekete is simply in error and ignorant that gold and silver are money, and not commodities, or if he's being intentionally misleading. In either case, the contradiction I pointed out earlier says that manipulation is in fact taking place. And that silver and gold are money points to why they are manipulated. So it would appear that Prof. Fekete also advocates the fiat currencies in his error/intention.

And one other thing. IF China is hedging it's reserve currency, the dollar, with silver and not backing it's own currency with it...

Doesn't that beg the question of why? Consider that inflation is starting to show up in yuan, and we now import price inflation whereas before we imported price deflation. And the US dollar is falling.

It would make sense to, in a roundabout way, back some of the dollar supply with silver (and use the manipulation in order to keep up with growing dollar supply!) in order to prop it up while the yuan devaluation attempts to "balance" with that in order to keep things going. If I had to guess, this borrowed time is for the election and the Olympics and, most of all, to defend the dollar and the monetary policy that created it.

Becuase if it were the other way around, then it would become PAINFULY obvious just how strong silver is and how strong the dollar isn't! Imagine a silver backed yuan... We'd be paying a FORTUNE to have them make things for us! Well, that simply will not do.

And that's the very unwanted price increase Fekete was talking about!

[Argentum]

Just got this in my e-mail from Jason:

http://www.silverstockreport.com/2008/basis.html

[cassowary]

To a fair and neutral basket of currencies, rather than to the dollah, and let us SEE where the price goes, Mr. Fekete.