Wednesday, December 22, 2010

Taking Internet Silver Conspiracies with a Grain of Salt

COMMENTARY - – December 16, 2010 – Earlier this month a video titled JP Morgan Silver Manipulation Explained hit the internet, and was an instant sensation among silver buffs and conspiracy theorists alike. Within a few days, the talking cartoon animals set us ablaze with misguided hope and anger. With large claims including how we the people could crash JP Morgan on account of a huge gaffe caused by a naked short order that they couldn't cope with, many went charging into battle.

Now, don't get me wrong. I'm a hobby conspiracy theorist myself, and am always open to debate over a drink with any of my friends on topics from everything including the Fed, to fractional reserve banking to the entire Bre-X debacle that all started from an office in my hometown of Calgary. But, this one was a head scratcher. How could a cheaply animated video complete with corny insults and funny noises and poop jokes capture so much attention? Why did this need to be debunked? Well, first off, the claims are self-serving and preposterous at best. Why would buying silver coins from a website sink the giant ship that is JP Morgan? Why would JP Morgan leave a ventilation shaft opening the size of a womprat for Luke Skywalker to fire his laser torpedoes at? It didn't add up.

So a little more attention to the matter, and the story quickly evaporates. Using basic supply and demand theories, we can see that this isn't such a simple task that we can all take part in just because we're buying silver. I've been doing that for years, and I don't see how just buying more will topple the giant. Even if it could, there would be plenty of time for JPM to stabilize itself and hedge buy taking the ETF route.

Look, there's a REAL lawsuit pending against JP MorganChase and HSBC for silver manipulation. This isn't even mentioned by the talking dog in the video. Why not? Probably because it needed to get to the main point in the first place, which was a plug for the website it was promoting.

Next is the $500 per ounce claim, which has been perpetuated by Max Keiser of RT fame. Likeable as he may be, this talk is ludicrous. Even at a gold to silver ratio of 1 to 17, which was seen after the Hunt brothers took a stab at manipulating the silver supply, and we're still only at a silver price in the range of $82. Where do we have to go as an entire economy to a $500 range? We're talking a shift of more than just a decimal place in the price they're wanting us to believe. Couple that message with the riled up feelings that a good old fashioned conspiracy starring the bad guys at JP Morgan, and our suspension of disbelief is in the hands of the video makers. We are better than that.

I like silver. I like conspiracy theories. But this kind of misdirection can be dangerous if taken too seriously. As always, take the free advice anyone gives with a grain of salt. Including my own.

G. Joel Chury

Editor in Chief

DISCLOSURE: No fee has been paid for the production and distribution of this article and as such should be viewed in the context of a commentary.

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