I caught a good interview by Charlie Rose on Bloomberg TV the other night of Ray Dalio, founder and head of Bridgewater Associates, the world’s largest hedge fund with some $150 billion in assets under management. Dalio has been making the rounds recently in promoting his new book, “Principles”, in which he lays out his beliefs for the investment business and the business of life. Now in book form, Dalio previously offered his work for free and which was downloaded more than three million times. For very good reason, when Dalio speaks, he is listened to even more than EF Hutton.
One of the best things about Dalio (and if you’re unfamiliar with him, please do a search on Google) is his rags-to-riches real life experience and his strong belief that we learn through our mistakes. In his case, his biggest failure and the cause of his near financial ruin was a mistaken bet on a stock market collapse in the summer of 1982.Instead of the market tanking for all the reasons Dalio had (correctly) anticipated, it exploded with a vengeance, creating losses and forcing him to lay off his employees (with whom he held close personal relationships) and resort to borrowing $4000 from his father to survive. For a more detailed version of the affair, here’s a good link.
http://www.institutionalinvestor.com/article/3751630/asset-management-macro/the-education-of-ray-dalio.html#/.Wcupk7le7bh
Staring into his own personal abyss, Dalio vowed to learn from it and set about to do just that, succeeding far beyond what anyone could have ever imagined. What resulted was an organized and disciplined approach to dealing with decisions and mistakes. Please recognize that I am paraphrasing in very simple terms what is a detailed plan for action on his part. In essence, Dalio’s design was to come up with investment ideas not currently widely-embraced (allowing for big rewards if correct), but then to subject those ideas to intense and deliberate critique. In Dalio’s words, the critique should take the form of “thoughtful disagreement”. Spend time and energy uncovering and developing new ideas, but then spend just as much effort in trying to uncover what’s wrong with the new ideas (before the market tells you that the idea was flawed). All in all, pretty good stuff.
The reason I bring all this up is because I feel it directly relates to silver as an investment idea and, all along and quite unknowingly, I may have been applying Dalio’s principles in my analysis of silver. Certainly, silver meets Dalio’s prerequisite for a profitable investment idea since it is far from widely embraced by the investment community, but there is a lot more to it than that. In fact, Dalio has been a long-time and strong proponent for gold and in the interest of full disclosure, some six or seven years ago, I wrote to him and his chief investment officer, Greg Jensen, about the merits of investing in silver. I remember having to print out and snail mail my thoughts to Dalio and Jensen because no email contact was available on the Bridgewater website.
Just like the vast majority of my attempts to contact those of great influence in the investment world on silver, I received no reply from Dalio, not that I was really expecting one. That mattered little, since I promised myself long ago that I would do whatever I could imagine to get others to see what I saw in silver and no response wasn’t a crushing blow or deterrent. So why am I bringing up Dalio’s principles?
Unbeknownst to me, it seems that I have been following Dalio’s advice about seeking serious critique for my ideas on silver, particularly of the thoughtful disagreement variety. How else would you characterize what I do? By writing on a public and semi-public basis, including to those at the very top of regulation and the organizations I claim are manipulating the price of silver (JPMorgan and the CME Group), I would contend that what I am doing is nothing but looking for thoughtful disagreement (including perhaps from Dalio himself). Sure, I get plenty of personal insults from some, mostly anonymous, but serious critique about the body of what I write?Never.
Here are the issues. Silver (and gold) prices are set by paper dealings on the COMEX by a few large speculators (banks and managed money traders), to the exclusion of input from real producers and consumers, making the price discovery process and the resultant price artificial. For the past nearly ten years, CFTC data have indicated that JPMorgan has been the dominant paper silver short seller, along with a few other large banks and as a result of that dominance and control none have ever taken a loss when adding short positions. In addition, for the past six and a half years, JPMorgan has accumulated a massive amount of actual silver (650 million oz) at rock-bottom and self-created depressed prices, all while never taking a loss while shorting silver on the COMEX.
I have carefully thought out the silver price manipulation for more than 30 years, yet I see no thoughtful disagreement to my presentation of it. What’s a guy got to do to get some thoughtful disagreement? Take a knee during the national anthem? I thought I was already doing the equivalent of that in openly calling out JPMorgan and the CME as the market crooks and manipulators they surely are. Yes, there were a few long public responses to my allegations from the CFTC, but the last was more than 9 years ago. Since then, as I have chronicled on these pages, JPMorgan has burst onto the scene as the big paper silver manipulator and physical accumulator (as a result of its takeover of Bear Stearns).
The whole thing is quite surreal – a major market voice (Dalio) preaching the need for thoughtful disagreement and the lack thereof on an issue that couldn’t possibly be more serious; the price manipulation of an important world commodity. It seems to me that this is not a situation that can remain unresolved indefinitely; sooner or later, someone will come up with the thoughtful disagreement that makes the body of my premise invalid or the price of silver will validate the premise by exploding. Obviously, I would prefer a silver price explosion, but truth be told, in the interim, I’d settle for some thoughtful disagreement.
Ted Butler
October 2, 2017
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