Patrick Byrne’s Bitcoin 2014 Keynote Address: 500 Years of Liberalism from the Netherlands to Cryptocurrency

  1. Gold and Silver Manipulation:

    Many assert that the giant concentrated short position is just a hedge.

    The eight largest shorts on the COMEX hold 320 million oz of silver futures net short, or an average of 40 million oz each. [JPMorgan’s short position is almost a third of that amount at 100 million ounces. – Ed]

    The eight largest silver miners in the world produced 255 million oz of silver in 2013 and little change is projected for 2014. I don’t think any of that production or future production is hedged.

    So if the world’s largest silver miners haven’t hedged their production, what is the legitimate economic explanation for the concentrated COMEX short position?

    The concentrated short position is a matter of public record and the mining company data are in the just-released Silver Institute annual review (by GFMS), as well as the recent release on silver by CPM Group, yet neither report made any connection.

    Let me state the obvious – in having sold more than what the eight largest miners produced, the eight largest COMEX shorts exerted more influence on price than did the miners with their real production.

    But since the short selling was in no way related to legitimate miner hedging, the price influence becomes illegitimate.

    COT data indicate a concentrated short position of 320 million oz is held by 8 traders and the annual silver reviews indicate the miners aren’t hedging [produced 255 million oz of silver in 2013].

    So what’s behind the giant COMEX short position?

    – Silver analyst Ted Butler: 17 May 2014


  2. Gold and Silver Manipulation:

    The 320 million oz concentrated silver short position is 36% of all the visible silver bullion in the world’s total ETFs and exchange inventories (875 million oz) and 40% of total annual mine production (800 million oz).

    Can you imagine the outrage that would erupt in any market, say the stock market, if prices were down 40% and there existed eight traders (7 unidentified) holding a short position equal to 36% of total stocks in existence?

    And if JPMorgan was the identified king stock short, would it be swept under the rug?

    While it’s clear that the regulators won’t intercede and break up the illegitimate concentrated short position in COMEX silver, neither can they make it easily go away.

    And it appears that the 8 big shorts can’t make it go away either, or at least they haven’t until now.

    Not only can’t the massive short position be explained in terms of hedging legitimacy, it also can’t be explained in legitimate economic terms.

    – Silver analyst Ted Butler: 21 May 2014

  3. State securities officials issue warning about Bitcoin, digital currencies

    By Darren Fishell, Bangor Daily News, Maine
    McClatchy-Tribune Information Services

    May 23–GARDINER, Maine — The state’s watchdog agency to protect investors has issued a warning Friday about the risks of investing in digital currencies, such as Bitcoin, Ripple or Litecoin.

    The warning from the Maine Office of Securities cautions that virtual currencies are subject to minimal regulation, are not insured by the Federal Deposit Insurance Corporation and protection of that currency can depend on the strength of a person’s computer security systems and those of third-party “e-wallet” service providers.

    For investors, the state securities office warned that the value of the currencies tend to be volatile.

    “The concept behind the currency is difficult to understand even for sophisticated financial experts,” said Securities Administrator Judith Shaw, in a statement. “Investors should be aware that investments incorporating virtual currency present very real risks.”

    In a phone interview, Shaw said the state office has not had any reports of fraud or complaints about virtual currency in Maine.

    “We’re watching it very closely to see if other state or federal regulators are going to actually regulate virtual currencies,” she said.

    The warning follows the lead of states like California and New Mexico and the North American Securities Administrators Association, which drafted a model notice in April. The Maine securities office is a member of that association, which Shaw said identified increased investment options in virtual currency as a possible trend in a recent report.

    The digital currency news website CoinDesk reported last month that California securities regulators have started to explore how digital currency businesses get licensed under state law as part of a broader study of digital currencies.

    In addition to trading virtual currencies as commodities, the state office cautioned investors about exchange-traded funds, which are indexed against a basket of stocks or commodities, and derivatives tied to virtual currencies.

    The warning references as a cause for concern the April bankruptcy filing of the Japan-based Bitcoin exchange Mt. Gox, which lost more than $350 million in virtual currency after hackers broke into the exchange.

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