Reflective Ramblings of a Random Robert

I’ve decided that Blog.com does not do enough spam filtering of comments, so I’m bailing on this site.

My new blog framework is already set up over on blogspot:

http://insiderobertsbrain.blogspot.com/

I will make no new postings to this site. Please update your rss feeds, subscriptions and bookmarks to reference the new URL above.

I’ve got a couple new articles that I am finishing up, so look for them on the new site within the next few days.

Somewhere in the archives of this blog is a post that compared the “Miracle Car” fraud from the 1990′s to the COMEX Gold and Silver markets.

Well, I recently refreshed that essay (read: removed all the bad words and updated some data) and turned it over to Rick Ackerman, who graciously ran it as another guest commentary on his website (#2 for me):

http://www.rickackerman.com/2010/09/selling-gold-that-grows-on-trees/#more-26618

Well, this one hit more than just Ackerman’s site. GATA picked it up, and Ed Steer ran a link in his daily commentary for Casey Research, calling it a “must read story”…

http://www.gata.org/node/9056

The flattery is literally emanating from my pores… frankly I’m completely blown away.

I enjoy a productive career… not boasting, just saying.

Some day I plan to downsize (some call it retiring), and yet I know that my brain will not stop working when that day comes, so I am always looking for the thing that I will do to pass time when time becomes a luxury for me. Even as an avid fisherman and golfer, I know that too much of any activity reduces the enjoyment gained.

So I figured I would learn to trade as a second career, and in my quest to learn the statistical nuances of successful trading strategies I happened upon Rick Ackerman’s website and proprietary trading method. Ackerman is a very successful trader and has been featured on just about every mainstream business channel and publication.

Rick’s site (http://rickackerman.com) also has an amazing discussion forum comprised of some very bright and intellectual minds. I have come to enjoy the daily discussion topics posted there very much.

Imagine my surprise when Rick approached me out of the blue and asked if I would post a guest commentary to his website- here, a financial guru who made his name on Wall Street and CNBC, asking some Joe Average computer dork  from Arizona to post a piece of content that would be read by millions.

I was blown away to say the least, but I gladly accepted and submitted the following essay, which Rick accepted and posted to his site on Monday, Augut 30:

http://www.rickackerman.com/2010/08/it-doesn%e2%80%99t-have-to-be-%e2%80%98inflation-vs-deflation%e2%80%99/

.. and I promise not to utter the nefarious “Guns don’t kill people, people kill people” banter more than just this one time.

As you can tell from my post below on Mexico- I favor the right of the individual (notice I did not say “subject” or “citizen”. or”resident”- I said INDIVIDUAL) to keep and bear arms.

I come across people on the opposite side of this argument frequently. I rarely let the discussion devolve into a heated debate, for I have re-iterated the following points so many times that I am nearly always prepared for just about every argument that my counterpart will throw at me:

“Take away the guns, and you take away the ability to commit violent crime”

- Actually, as in Mexico right now, if you take away the guns, you take away the incentive to take action against criminals or violent crime. The criminals will always have guns, and since they don’t really care to shun written laws, these laws only serve to help victimize the law abiding among us…

“Take away the guns, and you address the temptation to commit violent crime”

- hmmmm- more people are killed by knives than by guns in the US each year- look it up if you don’t believe me.

“Guns serve no useful purpose in a sophisticated society- we no longer need to hunt animals- we can raise them in large, factory style growth farms were we accelelerate their development and yield with toxic chemicals and hormones”

- Yes, exactly… and wall sconces with candles on them also serve no useful purpose in a sophisticated society, but we haven’t outlawed them yet. In fact, they seem to be an important part of the decorum in every 7  figure 5th avenue apartment in Manhattan. Maybe I should print some bumper stickers that read “you can have my gun when you are willing to trade your wrought iron wall sconces for it” Hmmm- I wonder if I could find a news story about some 5th avenue socialite being beaten to death by a 5 lb iron wall sconce…?

“Gunshots account for over 50% of the emergency room visits in large inner cities”

-So? Shoes account for over 90% of the blisters people get on their feet. Take away the shoes, and you take away the blisters, right? Take away the guns, and the statistics will soon read that knives, chains, and broken glass account for over 50% of the emergency room visits in large inner cities. Criminals are going to commit crimes- that’s what they do. The tools they use are irrelevant.

If my counterpart in the discussion still has any energy left at this point- I usually ask the following questions in the hope that they will THINK about forming thier own position, instead of re-hashing the lame viewpoints of other people:

1) Do you believe the founding fathers were wrong or short-sighted to incorporate the 2nd amendment? Think about that.

2) Would America be a better place today if the founding fathers hadn’t incorporated the 2nd amendment? Indeed, would we even be here at all? Think about that.

3) Does pacifism promote self-reliance? How many pacifists spend their lives being victimized?

So there you have it. Keeping arms is a RIGHT of the individual. It is not a “privilege” to be granted, or removed, by governments.

As an individual right, it means that the individual has the CHOICE of whether or not they feel it is in their own personal best interest.

As an individual right, it means that you and your more advanced elitist sensibilities do not get to make my decision for me. Look down your nose at me as just some stupid paranoid redneck if you must, but do it from a distance, because if you don’t respect me for my sensibilities, then I probably don’t respect you for yours, either…

Interesting…

http://business.financialpost.com/2010/07/07/is-it-time-for-generation-x-to-lead-us/

I like Mexico. I go there several times per year to fish, and to hang out on the beach. One day I would like to own a condo on the beach in Mexico.

But I don’t like crime, and Mexico seems to be one giant crime incubator.

Pay attention America- this is your future if Hilary Clinton and others of her ilk get their way.

In Mexico, firearms and ammunition are not allowed to be possessed by law abiding citizens.  The people, therefore, do not intervene when they witness crime, nor do they report it, for fear of becoming a target themselves.

So the criminals run the show- the only armed opposition to the drug cartels are the few non-corrupt cops and Federales.

In short, in Mexico there are two classes: the fearless, and the fearful.

 How do I think it will end?

Actually, I’m optimistic. The criminals have gotton so bold that now they are killing elected officials, and election candidates, without fear of reprisal. It is my viewpoint that eventually the only candidates that will be willing to run for office will be those of a more libertarian stripe  that promote repealling Mexico’s firearm ban.

Once the Mexicans restore the right of the individual to defend their lives, property, and livlihood, I believe the crime rates in Mexico will go the same way they have gone in Washington DC since that city repealed it’s handgun ban…down

and hopefully, when that day comes, the US will learn the ultimate lesson about why an armed population is a necessary barrier to tyranny and oppression (oppression in ALL forms- for governments are not the only ones that oppress- criminals do, too)

Everybody’s got that sea-floor webcam on their computers, or on their split screen on their TV’s.  Watching the black/brown geyser spewing ever more environmental disaster into the Gulf of Mexico every day….

People ask me what I think about and then get a double-crossed look on their face when I say “Well, I think it’s a good time to be buying shares in the Proshares DB oil fund” (ticker DBO)…

… I guess they expect some fanatical tirade about the environmental impact, and the loss of wildlife. After all, I am an avid fisherman who dreamed of fishing for Redfish off the coast of Louisiana some day (a dream that may now never come to pass). But, all I can say to that is that ANYONE who expected anything LESS than what we’ve gotten is a near-sighted utopian fool. 

The second the US Government granted the permits to drill, the wheels were set in motion for this eventuality. Just as every person gets in their car every day and drives to work not expecting to die in a 20 car pileup on the freeway… somtimes shit happens. In fact, there is fundamentally NO WAY to prevent the likelihood of oil rigs exploding and taking 11 dudes on a fiery final journey. If we drill for oil to create fuel to drive our cars, then some people are going to die as a really sucky side affect of this complex system.

We drive, we burn fuel, we drill for oil, and some of us die for it; and some birds die, and some fish die, and some turtles die… Nature is astounding for it’s fundamental lack of compassion or discretion when it decides that it’s time for some death.

So my response to this disaster is that it simply offers more evidence that the US deserves to be seen as the world class retards that we are (my apologies to those who are offended by my failure to use a more PC term like “Intellectually and evaluativley cognitively challenged”-  Retard simply has fewer letters and is easier to type)….

I mean, look at this article about the US rebuffing offers of help from the very countries that INVENTED off shore oil extraction technologies:

http://www.financialpost.com/Avertible+catastrophe/3203808/story.html#ixzz0sGacwW4e

How can anyone read the article above and not deduce that the US is run by a bunch of mental midgets? (again- my apologies to the “vertically challenged” among us- I just think midget is a funny word).

As to the environmental impact… I’m ambivalent. People are not even the largest consumers of oil on this planet (are you surprised to hear that?)

Tons of oil seaps into the Gulf of Mexico from the seafloor, to be consummed by oil eating bacteria- bacteria that are probably having the equivalent of little bacteria block parties and orgies as they gather and sing the bacteria version of  “Happy days are here again”… with little bacteria economists warning them about the dangers of “oil bubbles” etc…

In the long run, nature wins, and people lose, so we should enjoy the good times, prepare for the bad times, and use our brains to evaluate nature’s plan for us, because tomorrow it might be your day to be incinerated on an oil rig, or in a 20 car pileup on your way home from work.

Now, if you’ll excuse me, I’ve got to figure out where I’ll be going fishing next, since Louisiana is pretty much out of the question…

Below is a fantastic article on the nature of US Government spending, and it also offers a stellar commentary on how easily the Wall Street banks snookered the Congress with the ultimate bait and switch:

Here is the source:

http://thetruthwins.com/archives/26-million-tax-dollars-spent-to-train-chinese-prostitutes-to-drink-responsibly-on-the-job

Here’s the entire article- excerted from the source:

“Just when you think that the wastefulness of the U.S. government can’t get any worse they go out and spend money on some really bizarre things. Now it has come out that the U.S. government is spending $2.6 million U.S. tax dollars to train Chinese prostitutes to drink responsibly on the job. Yes, you read that correctly. The National Institute of Alcohol Abuse and Alcoholism, which is a part of the National Institutes of Health is spending $2.6 million tax dollars to study the drinking habits of Chinese prostitutes. Apparently the scientist running the project believes that there is a legitimate governmental interest being served by this study, but this is just ridiculous. There are people losing their homes and sleeping in their cars and living in tent cities in America tonight, and the U.S. government is spending money to train Chinese prostitutes how to drink responsibly? A whole lot of people deserve to be fired over this. But unfortunately this is not an isolated incident. The reality is that the U.S. government is wasting money at an unprecedented pace. In a stunning waste of money, the U.S. government is actually spending $400,000 to study gay sexual behavior in Argentina bars. Seriously? Yes. And we wonder why the federal budget deficit is ballooning out of control. The U.S. federal budget deficit for the current year is now projected to be $1.8 trillion, which would be about four times the record set just last year. When it comes to wasting money, the United States has become the supreme champion. There is simply nobody better at it. Whether it is the trillions wasted on the Wall Street bailout, the hundreds of billions wasted in Iraq or the hundreds of billions wasted in frivolous government spending, there is no match anywhere in the world for the incredible skill that the U.S. government has for flushing money down the toilet. After all, what other government would pass out trillions of dollars to a bunch of bankers and not be able to tell us where the money went? When JPMorgan Chase was asked what they did with a 25 billion dollar payment that they were given, they had the following to say about it: “We have not disclosed that to the public. We’re declining to.” What? 25 billion taxpayer dollars go to them and they tell us to stick it? The Associated Press actually contacted 21 banks that received at least 1 billion dollars from the U.S. government and asked them the following questions….. *How much has been spent? *What was it spent on? *How much is being held in savings? *What’s the plan for the rest? Now how many of those banks do you think provided specific answers to the Associated Press? The answer is none. So do we have any clues where the bailout money went? Well, according to one study, banks that got taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits in 2008. Hmm…..my bonus was a 50 dollar gift card. Somehow I feel ripped off. Are we supposed to feel good that all those fat cat executives got their bonuses on time? Americans were told that they “had” to pass the bailout bill “or else” they would face serious consequences. And so how is all of this money being spent? Much of it is going to executive bonuses and towards “picking off” smaller banks. The Wall Street Journal is reporting that the major Wall Street banks owe their executives more than $40 billion in pay and pensions that these firms fully intend to deliver to them. Here are just a few examples of what these firms owe to their executives….. Goldman Sachs: $11.8 billion J.P. Morgan Chase: $8.5 billion Morgan Stanley: approximately $10 billion to $12 billion The American people should have stood up and DEMANDED that NO taxpayer money go to these executives. Instead, Barack Obama and John McCain pushed through a bill loaded with pork that will end up benefiting Wall Street executives more than it will benefit the average guy on main street. The bailout bill contains “some” restrictions on future bonuses, but according to the Wall Street Journal, “the rules won’t affect what the banks already owe their executives.” Wall Street executives also are admitting that this bailout money is not going to go for loans, but rather to pick off smaller banks. Just listen to what one JP Morgan executive said about the bailout money during a conference call that New York Times reporter Joe Nocera was listening in on: “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.” Did you get all of that? JP Morgan was admitting that they will use most of the 25 billion in bailout money to acquire more banks. It was supposed to be used to loan money to regular Americans! But this is what the same executive said about that later on in that conference call: “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” Do you get that? JP Morgan has NO INTENTION of increasing loans! Are you starting to get the picture? “Continue to tighten credit” means that they intend to loan LESS money. So why in the world is the U.S. government giving them bailout money? On another front, it is now being revealed that billions upon billions of dollars have been totally wasted in the reconstruction of Iraq. It’s bad enough that we had to pay to blow Iraq up and pay to put it back together, but now they are telling us that billions and billions was simply “wasted”? Ouch. But the federal government wastes money every single day in a thousand different ways. Just check out some of the ways that the U.S. government wasted money in 2008….. *$1,529,220 for an Appalachian Fruit Lab. *$742,764 for olive fruit fly research. $211,509 of this amount was to be spent in Paris, France. *$172,782 for the National Wild Turkey Federation in Edgefield, S.C. *$1,128,000 for Big Brothers/Big Sisters of Alaska Eagle River for an at-risk youth mentoring program. That is one expensive Big Brother program! There must be a lot of at-risk youth in Alaska. *$50,000,000 for REAL ID grants. Got to be sure to track and trace those unruly American citizens! *$123,050 for a Mother’s Day Shrine in Grafton, West Virginia (population 5,489, with a land area of 3.8 square miles). Those are just a few sad examples. The list could literally go on for pages and pages. The point is that the United States government is squandering the future by wasting money like it never has before. I wonder what our children and our grandchildren are going to think about all this. Do you think that they will be thankful that we wasted all of their money and stuck them with the bill?”

In 2004, two young men named Robert “Buddha” Gomez and James Nichols fleeced thousands of people to the tune of 21 Million dollars by selling these people “paper” automobiles… Here’s a link to more on this fascinating story by Car and Driver’s John Philips:

http://www.caranddriver.com/news/car/05q2/review_god_wants_you_to_roll-car_news

These two hucksters swindled thousands of people into paying real money for nonexistent cars that were part of the fabricated estate of a fictitious, deceased eccentric millionaire, who declared in his will that these cars were only to be sold to “decent, churchgoing people” at unheard of bargain basement prices as low as $1000 apiece.

If Gomez and Nichols had known what was good for them, they would have studied the COMEX Gold and Silver futures market a little more closely before embarking on their little adventure into the exciting world of fraud.

We all know that a futures contract is merely a paper promise to deliver a quantity of bullion (or some other commodity) for a pre-determined price at some future date. This is analogous to the paper promise to deliver “miracle cars” at some future estate settlement date; and as long as the promise to deliver can be sold to a willing buyer, then the scam can continue in perpetuity.

Gomez and Nichols’ scheme collapsed and they were both hung out to dry when the need to deliver real cars to settle these purchase agreements came due.

In the Gold and Silver markets, by contrast, the scam is aided and abetted by a regulatory environment whereby the threat of default is curtailed simply by raising the number of allowable paper promises (aka position limits) that can be issued by willing sellers. The COMEX allowable position limits in Gold and Silver are already completely out of whack, and when you add the “special limit exemptions” that have been extended to the “Big 8” Bullion Banks, the true scale of the fraud committed in the interest of preserving faith in paper money becomes clear. As these position limit exemptions have increased ever higher toward infinity, the legal ability to sell “Gold that grows on trees” has influenced Bullion Bank traders to be more bold and more deeply entrenched in the fraud…

Just look at this comparison graph showing the extent of forward selling (days of production) by the largest traders in various commodity markets to get a feel for the level of forward selling that Gold and Silver are subjected to by the big commercials, compared to other commodities:

Why would world markets need so much forward sold Silver and Gold? Doesn’t everyone know that Gold has very limited industrial use (especially compared to Platinum or Copper)? and since photographic storage has moved from cellulose to silicon, industry’s chief consumption points for Silver have also diminished drastically.

And, if this much Gold and Silver really is changing hands out there, then why are eligible COMEX inventories sitting at 20 year lows?

If the Big Commercial traders are laying on these enormous short positions as part of a legitimate hedging strategy, then why wouldn’t the same strategy work with Crude oil? or with Wheat?

Most notably- why wouldn’t this same hedging strategy work with Copper…?

Is it purely coincidence that there is so much concentration by a few Mega-banks on the short side of the open interest in PRECISELY the two elements that have served as the most viable forms of money for longer than any other medium in human history?

Ok- I’m drifting dangerously close to the “tin foil hat” event horizon – Let’s get back to Gomez and Nichols.

These two chumps were eventually brought down by people who became impatient due to their expectation of physical delivery of the cars that they “purchased” – So too might the expectant recipients of physical bullion eventually reach the same level of impatience with those who are selling them paper promises to deliver real bullion (that is, unless they really actually prefer owning even more potentially worthless paper contracts over physical metal)

Bernie Madoff declared that he knew his empire was a ponzi scheme for years before he got taken down, and he stated that once you realize it is fraud, your only choices left are to let it collapse immediately, or run the fraud as high (and as long) as you can- You become consumed by it. Is this what is happening today in the big Silver and Gold exchanges?

If you can logically conclude that there is no fraud in the COMEX Gold and Silver Markets, then you can also conclude using the same logic that what Robert Gomez and James Nichols went to prison for was selling “futures contracts” against automobiles that they did not own, and had no intention of ever delivering. Is this any different than the forward sold (short) positions in COMEX Gold and Silver?

If Gomez and Nichols had successfully attempted to persuade the judge to allow them to simply increase the number of automobile delivery promises that they are entitled to issue, then they might have been able to buy some cars in the “current month Craigslist spot market” and made good on their earlier promises, and they would both still be free men… right?

Et tu, COMEX?

Watch the video on LewRockwell’s site of Bill Clinton acknowledging that the current mess was caused by Fed issued soft money that ran rampant for decades without the discipline of the Gold standard.  Bill gets it, and he hits the nail right on the head when he castigates Wall Street for not providing any valid productive value to the economy.  Great stuff:

http://www.lewrockwell.com/blog/lewrw/archives/56731.html

Everyone should support commodity trading policy reforms that force physical collateral obligation when issuing future delivery contracts on the commodity exchanges. No one should be able to legally sell that which they do not own.

Please write your Senator today and make sure they understand that.

Read the Commentary here:

http://uruknet.info/index.php?p=m65575&hd=&size=1&l=e