silver price

CNBC Co-Anchor, Correspondent Confirm Silver Markets Manipulated?

Yesterday, I talked about claims that gold is manipulated. Today, it’s silver.

Anyone happen to catch CNBC’s Squawk Box last Friday? Christopher Whalen, Senior Managing Director of NYC-based Tangent Capital Partners appeared on the show. What was said in an exchange between him and CNBC Squawk Box co-anchor Andrew Sorkin and Chief International Correspondent Michelle Caruso-Cabrera raised a few eyebrows, especially those belonging to viewers who believe the silver price is being manipulated. From their discussion:

SORKIN: What may be less trivial is this situation, this scandal, involving LIBOR.
WHALEN: Well, welcome to the banking industry. I mean, come on, you know…
SORKIN: No. You know, you hear about these things, and you used to think that these things were conspiracy theories. Right? You hear this about people manipulating LIBOR. People are manipulating the silver markets. And you’d say…
CARUSO-CABRERA: And they are!
SORKIN: And they are!


“Finding Footing in Financials”
(Discussion of silver markets- 9:26)
CNBC Video

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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The Crash Prophets Revisited, Part 2

(Editor’s note: Part 1 located here)

Continuing the three-part series of posts entitled, “The Crash Prophets Revisited,” back on June 15, 2007, I discussed what legendary investors Warren Buffett, Jim Rogers, and George Soros had to say about the future of the U.S. economy at that time. That summer, Buffett worried about mounting trade deficits and what it might mean for the U.S. dollar. Jim Rogers was not only concerned about the U.S. currency, but also a housing crash and recession. Like his old investing partner, Soros warned those who would listen about a hard landing for both housing and the economy.

Tonight I’m going to talk about Soros first before tackling Buffett and Soros.

George Soros

George Soros is the chairman of the financial services/investment strategies firm Soros Fund Management, LLC, the 46th richest person in the world with around $14.5 billion (2011 Forbes list), and is often referred to as “the man who broke the Bank of England.” Notable exploits of the Hungarian-born investor, financier, and champion of liberal causes include:

• Co-founded the Quantum Fund, one of the first truly international funds, with Jim Rogers in 1970. Over the next 10 years the fund gained 4,200% while the S&P 500 advanced only 47%.
• In September 1992, he risked $10 billion on a single currency speculation when he shorted the British pound. It was reported that he made almost $2 billion from that trade.
• Along with that famous pound trade, he is cited by some as the “trigger” behind the Asian financial crisis in 1997, as he had a large bet against the Thai baht.

While George Soros says that the U.S. dollar is “quite strong” these days, he warns that the U.S. economic recovery could stall if the Federal Reserve starts raising interest rates anytime soon. Cynthia Lin wrote on the Wall Street Journal website on April 8:

The level of debt that is acceptable and when to begin tightening monetary policy in the U.S. is an important but “very open” question, billionaire financier George Soros said Friday in interview on Bloomberg TV from Bretton Woods, N.H.

“We’re in the midst of a very complicated, delicate two-phase maneuver,” Soros said, highlighting the economic juncture at which the U.S. resides, where “flooding the world with money” is drawing to an end and policymakers are beginning to debate when to tighten monetary policy…

Soros added that he believed the dollar to be “quite strong.”

Soros also stressed that a premature turn to tightening has its risks.

“There is a danger that, by pushing this too far, you could abort the very fragile economic recovery that we are currently enjoy and push the economy into a slowdown,” he said, “and I rather fear that these political forces might push us there.”

Warren Buffett

Warren Buffett is the chairman and CEO of Berkshire Hathaway, a conglomerate holding company headquartered in Omaha, Nebraska, the third richest person in the world with around $50 billion (2011 Forbes list), and has been called “The World’s Greatest Investor.” His moneymaking exploits are legendary:

• Buffett’s first investment company turned a mere $100,000 into $100 million in just 14 years. As for Buffett’s part of the original investment, he put up only $100 before becoming a millionaire for the first time at age of 32.
• Berkshire Hathaway’s stock price increased at a rate of 21.1% annually from 1970 to 2010
• A 2007 academic study found that using Buffett’s investment techniques for 31 years would have delivered an annualized return of 25%- double the return of the S&P 500

These days, while Warren Buffett is bullish on America’s prospects- he’s still bearish on the U.S. dollar. From his latest annual letter to Berkshire Hathaway shareholders:

Money will always flow toward opportunity, and there is an abundance of that in America.

Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain.

Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.

We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.

Perhaps not for the greenback though. The Motley Fool’s Rich Smith wrote on the MSNBC website on March 28:

Let the word go forth: On Friday, March 25, 2011, Warren Buffett predicted the decline of the U.S. dollar.

In a speech given in New Delhi (where he’s hunting up some cheap Indian stocks), the chairman of Berkshire Hathaway warned investors to avoid “long-term fixed-dollar investments” such as 10-year U.S. Treasury bonds. Buffett worries that the $2.3 trillion in new money our government has pumped into the economy, when combined with interest rates so low they’re practically giving money away, are combining to dilute the value of the dollar.

As a result, Buffett warns: “If you ask me if the U.S. Dollar is going to hold its purchasing power fully at the level of 2011, 5 years, 10 years or 20 years from now, I would tell you it will not.”

What’s more, he’s matching actions to words. Over the last couple of years, Buffett has been selling off longer-dated bond holdings, shifting assets into cash and shorter-dated paper. Berkshire’s holdings of debt dated longer than 10 years dropped 31% over the past 18 months, while Berkshire’s cash holdings leapt 56%.

Jim Rogers

Jim Rogers is the Singapore-based chairman of Rogers Holdings and Beeland Interests, Inc. Rogers is an investor, financial commentator, and author, whose accomplishments include:

• Co-founded the Quantum Fund with George Soros in 1970
• In 1980, Rogers “retired” at age 37 and rode a motorcycle around the world. Subsequent record-breaking travels and a profound global awareness contributed significantly to his investment strategy and books.
• In 1998, created the Rogers International Commodities Index (RICI). Predicted the commodities rally that began the next year
• Correctly called the 2008 global financial crisis

Jim Rogers continues to be skeptical of America’s future. He was recently interviewed by Anthony Wile of The Daily Bell, a weblog maintained by The Foundation for the Advancement of Free-Market Thinking (FAFMT). From Wile’s April 5 post:

Daily Bell: Any more thoughts on the American Tea Party, which just scored some political gains? As we recall you were critical. Any further insights for us on the American political situation?

Jim Rogers: Well it appears that America does seem to understand, at least on paper, that there are staggering problems. We still haven’t seen much action. I haven’t seen anybody cut any spending in a serious way. We are still bankrupt and the situation is getting worse, not better. Now, usually when you have this kind of situation it usually leads to social unrest and more political backlash, I suspect it will this time too…

Daily Bell: Where is gold headed? Silver?

Jim Rogers: Everything I have told the world about gold and silver is going to continue to happen. Eventually gold will be a couple of thousand dollars an ounce, and probably much higher, as currencies become more debased, who knows how high. Silver will definitely reach new highs. As I have said, the US dollar is in serious trouble, and will be debased a great deal in the future, and eventually will be problematical itself. So gold and silver will be measured by the US dollar but I hope there will still be some sound currencies no matter what happens…

Rogers, who in December 2007 sold his New York City mansion for $16 million and moved with his family to Singapore, issued a new warning:

Daily Bell: We asked you this before. What will the world look like in 10 years?

Jim Rogers: There will be many different governments and many different political parties and unfortunately more destruction from civil wars and outright wars. The world will still be in a state of turmoil and perhaps it will be much worse. I could be wrong but you should at least examine the possibility that I might be right. What I would encourage everybody to do is to figure out ways to protect themselves. Most people have insurance policies, like fire insurance, car insurance, health insurance and you hope you never have to use them. But I would hope that everybody takes out some kind of insurance policy for their money, in case I might be right and hope that I am dead wrong and then it’s unused money. But if I am right, at least it’s some protection.

(Editor’s notes: Italics added for emphasis; Part 3 located here)

Sources:

Lin, Cynthia. “Soros: Politics Is Clouding Important US Debt, Policy Decisions.” Wall Street Journal. 8 Apr. 2011. (http://online.wsj.com/article/BT-CO-20110408-710834.html). 20 Apr. 2011.

Buffett, Warren. 2011 Berkshire Hathaway Inc. Shareholder Letter. Berkshire Hathaway. 26 Feb. 2011. (http://www.berkshirehathaway.com/letters/2010ltr.pdf) 20 Apr. 2011.

Smith, Rich. “Buffett Warns: The Dollar Will Decline.” MSNBC.com (Motley Fool). 28 Mar. 2011. (http://www.msnbc.msn.com/id/42306814/ns/business-motley_fool/). 20 Apr. 2011.

Wile, Anthony. “Jim Rogers on the Dangers of Price Inflation, the Promise of Commodities and America’s Continued Decline.” The Daily Bell. 3 Apr. 2011. (http://www.thedailybell.com/1970/Anthony-Wile-with-Jim-Rogers-on-the-Dangers-of-Price-Inflation-the-Promise-of-Commodities-and-America%EF%BF%BD8364;%EF%BF%BDs-Continued-Decline.html). 20 Apr. 2011.

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