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Operating
a website requires monitoring to make sure there are no problems but doing so
can uncover very interesting nuggets of information. For example, on 24
February 2010 at 11:15 EST in the evening someone
at Goldman Sachs Company (GS) in
the main NYC office found RunToGold through Google by searching for the
phrase ‘buying
silver‘.
Gee, I
wonder who that someone
was and what they are thinking. Originally, I was thinking of posting their
home address, picture, resume, social security number and other websites they
visited but they are not safe for work, and considering the hostile feelings
towards the company, I decided against the personal information. But Eric
Schmidt, CEO of Google, would probably not mind considering his statement to
Maria Bartiromo:
I
think judgment matters. If you have something that you don’t want
anyone to know, maybe you shouldn’t be doing it in the first place. If
you really need that kind of privacy, the reality is that search engines
— including Google — do retain this information for some time and
it’s important, for example, that we are all subject in the United
States to the Patriot Act and it is possible that all that information could
be made available to the authorities.
BUYING
SILVER INTENT
The
brilliance of the Google Superbowl ad was
in its ability to communicate an entire story with only a few lines of text.
Truly,
one’s search patterns can reveal intentions. Now, what can be discerned
by these virtual footprints from one of Goldman Sachs’ 36,000+
employees? Conclusively, probably not much and we [NSA] would need access to
more transactional databases and
the passage of S. 733 the Cybersecurity Act of 2009 but
we can still speculate about talk around the water cooler or higher order
drama. Who knows if that someone
was the secretary, their boss or both. It was 11:15PM after all!
SILVER
BACKWARDATION CLOSE
Lately
I have not followed the SIFO rates closely so this was my initial suspicion
and once again it appears that silver is nearing backwardation. While the
paper silver market which has an unlimited supply of silver and the physical
silver market is constrained by actual metal, the fractures between the two
are beginning to emerge again.
In
2009 I chronicled the silver backwardation that led to a 60% rise in silver prices over
a seven month period. Additionally, the gold to silver ratio has moved over
10% in less than two months. With silver recently slipping below its 200dma
it is becoming a good value. But with silver getting cheaper this move in the
ratio portends a slowing of the precious metals bull. And so there are
conflicting signals.
Click to enlarge
CFTC
SILVER MARKET INVESTIGATION
 The
slide towards backwardation is particularly enthralling given the
CFTC’s three investigations of the silver market in five years.
Ironically, silver analyst Ted Butler who has been particularly vehement of
the CFTC’s faux investigations seems to like the new Chairman Gensler
and on 10 February 2010 wrote,
I have
been unabashed in my praise for Chairman Gensler since the time he assumed
office. I have called him the greatest chairman in CFTC history. … I
understand that disagreement [with the praise]. Yes, he was a partner of
Goldman Sachs, the dreaded “vampire squid” of the financial
world. Yes, he was a participant in the deregulation of 2000, which added
greatly to the financial crises of the past couple of years. Yes, he is an
“insider,” with connections and access to those in power.
What
could Goldman Sachs know about the silver market, what might be being
discussed around the water cooler and how might Chairman Gensler’s
influence with his old cronies play into this?
CONCLUSION
The
digital world offers tremendous opportunity to covertly monitor and draw
inferences. In this case, someone at Goldman Sachs was researching about
buying silver and they could have easily cloaked their behavior with anonymous web surfing.
Imagine the latent power Google and the NSA have
and would using it constitute ‘insider
trading‘?
Yet, a
former Goldman Sachs employee is the CFTC chairman who is embarking on the
third investigation of the market in five years while the metal drifts towards
backwardation. The paper price of gold and
silver may be drifting lower but the physical silver is getting cheaper and a
better value.
If you
do not have a core position, to protect against the Laboon of sovereign debt defaults, negative
FDIC funds, quantitative easing, etc. then yesterday was when you should have
acquired. If you already have a core position then it may good to wait a
little while longer for even better silver prices such as 0.95x the 200dma.
DISCLOSURES:
Long
physical gold and silver with no interest in sovereign debt from Greece,
Portugal, Italy, Ireland, Spain, etc., GS, or the problematic SLV, Streettracks Gold ETF Trust Shares or
the platinum ETFs.
Trace Mayer
RuntoGold.com
Trace Mayer,
J.D., holds a degree in Accounting from Brigham Young University, a law
degree from California Western School of Law and studies the Austrian school of
economics. He works as an entrepreneur, investor, journalist and monetary
scientist. He is a strong advocate of the freedom of speech, a member of the
Society of Professional Journalists and the San Diego County Bar Association.
He has appeared on ABC, NBC, BNN, many radio shows and presented at many
investment conferences throughout the world.
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