In that thread, you'll find a number of contributions from folk who know much more about the precious metals markets than most of us ever hope to know in your lifetime, and a feast of opinion and perspectives which will unsettle your stomach because of the variety.
A few comments caught my eye, and I want to discuss them briefly, in relation to Bullion Banking. But first, an allegory. This morning I had this scene in my head - it's from the opening scene of 'The Prestige', where character Robert Angier (Hugh Jackman) appears to be in trouble, and Alfred Borden (Christian Bale) subsequently tries to free his nemisis but fails.
It's the perspectives that's interesting here - Borden does not have the full set of information to work with, comes to the wrong conclusions - what he interprets as a trick gone wrong is in fact part of the complex con being played on him. After all, who would have thought that Angier killed a clone of himself each night of the performance (using Nikola Tesla's technology), simply as bait for Borden. Great stuff, great film.
Comment #1 is a random one from 'russiaways', who sums up the conversation thread quite neatly:
"Markets, global sized and instantly connected are inherantly complex interactive systems that will resist or ignore all our efforts to totally understand and predict them. In this respect I have come to a greater awareness of this complexity within the PM markets, but only insomuch as to see deeper levels of interaction, interpretation and more potential actions/decisions available to traders based upon their judgements ..." (link)
Comment #2 is the contributions from Bron Suchecki (comments are made in a personal capacity and do not represent the views of the Perth Mint):
"On my to do list is a paper on a bullion bank run or how a paper/physical price divergence would play and this discussion has provided some good material. Problem is that I see that paper being at least 100 pages long, primarily because there are a multitude of actors in the bullion market with different motivations and how each reacts to some trigger event (or no event at all, just a slow melt) and react to each other's actions is complex to say the least."(link)---
In the same thread, Bron makes an interesting point about his own personal position and how he is able to observe information on physical flows, my takeaway from that comment is that the actual Bullion Banks also have access to information about physical flows, if they see they are really in trouble then they are in a position to act, long before you and I can*. I've had the same thoughts as I've been looking at bullion bars data thinking that I can make some good money by correlating at inventory levels, stock movements and price levels ... the bullion banks already have that data and they are way ahead of me.
If, from my limited perspective, I deduce that the Bullion Banks are in trouble then I venture it simply means I've got a lot more homework to do. By the way, I'm not refuting any particular blog author(s), just trying to put forward an argument (however fragile) that the Bullion Banks (and by extension the lever-pullers like the FED and other central banks) might have things under control just fine, and that the discovery of how they are doing this, is indistinguishable from magic simply because the inner workings are complex beyond our best understanding.
* that is sort of FOFOA-ish, but my point here is that the music is still playing, when we have all expected it to stop by now. Is there a deeper magic by which the game of musical chairs can continue indefinitely?
** [Update 13-May-2012] the Martenson thread hit 30 pages before petering out. Lots of good stuff there. I have archived every page, and I'll monitor it for another month or so, then produce a final PDF archive of the discussion for our permanent files.