ETF Price Suppression Mechanics
I've got a response up to Andrew Maguire's TF Metals Report article on the corporate blog "explaining" how bullion banks use ETFs to suppress the prices of gold and silver.
I wasn't planning on it turning into a 5200 word, 12 page article, but so many memes to set straight (do ETFs have the gold, ETF market making, share borrowing, 100:1 fractional reserve bullion banking) plus Andrew really didn't explain the "mechanics" very well.
I suspect Andrew expropriated Victor's idea about the ETFs being used as a source of metal, far too many similarities I think (eg reference to "inventory financing" and the selling and buying GLD versus unallocated strategies). Andrew really got himself into a knot however in explaining these.
I've had it on my to-do list to address Victor's post in detail, and I have sort of done that with this Andrew response, but it does not address Victor's inventory changes and "inventory strategy", for which I need time to analyse the numbers in detail myself.
I look forward to Victor rebutting my comments, which will be funny because he'll be supporting Andrew at the same time in a way.
One point I would make is that Andrew's post was originally written for TF's "Army" members. Ignoring the factual errors, the best that can be said is it was written in a slapdash way, stream of consciousness style, without much effort in writing simply and clearly. I would have thought paying members deserve better.
I was a bit suspicious when Andrew "arrived" out of nowhere with his evidence and then surprise, he shortly thereafter had a service to sell at http://www.coghlancapital.com/. Not supplying his CV also doesn't help (but FYI he has his own Wikipedia page). I also don't buy TF's explanation that Andrew "doesn't talk to ANYONE because of the ongoing CFTC investigation and the current silver manipulation civil lawsuit" - releasing a CV isn't going to be a problem in that respect. Jeff Christian has made a big deal about the CV, so why not bury him now on that matter?
Anyway, this article by Andrew has just got me asking more questions about him. This may seem like small stuff, but:
1. Andrew's use of "spot index" - this is not how London bullion traders talk (and I checked with a bullion bank contact to make sure and they said that phrase is not used).
2. Getting the number of GLD's APs massively wrong.
3. Borrowing shares "from the ETF".
4. "Allocated at the fix."
These are just not mistakes someone with deep knowledge of the bullion market would make. I note that his Coghlin website About section says "the last 19 years of which have been as a metals specialist" - doesn't say "precious metals specialist". My best guess at this time is he is a trader of base metals who made the switch to precious metals as that is the hot market and doesn't want to release his CV because it is hard to get people to pay you for precious metal trading advice if you can't demonstrate experience in that market.
Hey, this speculating without any facts and making stuff up is fun and easy. I should do more of it, everyone is doing it you know.
I was a bit suspicious when Andrew "arrived" out of nowhere with his evidence and then surprise, he shortly thereafter had a service to sell at http://www.coghlancapital.com/. Not supplying his CV also doesn't help (but FYI he has his own Wikipedia page). I also don't buy TF's explanation that Andrew "doesn't talk to ANYONE because of the ongoing CFTC investigation and the current silver manipulation civil lawsuit" - releasing a CV isn't going to be a problem in that respect. Jeff Christian has made a big deal about the CV, so why not bury him now on that matter?
Anyway, this article by Andrew has just got me asking more questions about him. This may seem like small stuff, but:
1. Andrew's use of "spot index" - this is not how London bullion traders talk (and I checked with a bullion bank contact to make sure and they said that phrase is not used).
2. Getting the number of GLD's APs massively wrong.
3. Borrowing shares "from the ETF".
4. "Allocated at the fix."
These are just not mistakes someone with deep knowledge of the bullion market would make. I note that his Coghlin website About section says "the last 19 years of which have been as a metals specialist" - doesn't say "precious metals specialist". My best guess at this time is he is a trader of base metals who made the switch to precious metals as that is the hot market and doesn't want to release his CV because it is hard to get people to pay you for precious metal trading advice if you can't demonstrate experience in that market.
Hey, this speculating without any facts and making stuff up is fun and easy. I should do more of it, everyone is doing it you know.
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