Today In Silver

Yesterday Dan Norcini wrote a nice commentary on “gold spreads”, which are essentially a form of the gold basis expressed in the prices of different futures contracts. His explanation of how spreads, the basis, contango and backwardation work is very straightforward and easy to understand and everybody who seeks to understand gold and silver as well as the markets in general should read it. In particular I would focus on the following:

However, there is one thing that no amount of market intervention and price manipulation can succeed in doing and that is in changing the basic structure of the futures market as evidenced by the relationship of the front month contracts to the later dated contracts.

In trading terms, we refer to the “spread” between the front month and a back month/months or the difference in price between the two, as a gauge of demand for that particular commodity. As a general rule, when the front month trades at a discount to the next month or to a later-dated month, the structure of that particular commodity futures market is normal or in contango. A market in contango will see those distant month contracts trading at enough of a premium to the front month to account for any storage charges, insurance against loss and interest rates. Simply put, a seller has to be recompensed for his/her expense in storing a commodity while they wait to sell it into the market at some point in the future.

Whenever a market begins to see this “spread” between the front month and the next month or more distant months begin to tighten or narrow, then something is beginning to change regarding the demand/supply picture in that particular commodity. Why is this? Because the market is ratcheting up the front month price and attempting to send a signal to potential sellers that demand is increasing and that they are better served by selling sooner rather than later. Economically speaking, the incentive to store the commodity, pay all those storage costs, insurance costs, etc,. is not worth the increased cost that they might hope to receive at some point in the future. “Sell it to us now and we will pay you more for it than if you try to sell it later”, is the message the market is sending.

When markets begin moving in this direction, narrowing the spread, they are said to be moving towards a condition known as, “backwardation”. True backwardation occurs when the front month moves to a PREMIUM over the next month and particularly over the next set of three or four different contract months ( a note here - generally a market will not go into backwardation more than a few distant contracts out because it is assumed that the increased demand will result in increased production at some point and induce producers of that particular commodity to increase production on out into the more distant future bringing the demand/supply picture into more of an equilibrium. That will serve to bring the market back into a more normal structure of contango).

Backwardation is a powerful signal of very strong demand that is attempting to send a signal to the market that it needs more of that commodity to satisfy existing levels of demand. While market price manipulation can be somewhat effective short term for fogging signals generated from a rising price in gold for example, it is generally unable to affect the spread structure of the entire set of futures contracts listed on the board at any given time.

Even ignoring what Mr. Norcini says about Central Bank and bullion bank manipulation of gold prices, he is absolutely right that you cannot manipulate both the price and the basis at the same time (although see below for an exception). This is because manipulating the basis requires being in the market with both legs (long and short), which prevents effective price manipulation, whereas manipulating the price requires being in the market with one leg (long or short), which prevents effective basis manipulation. There is more to it than that but that is the simple explanation.

As far as what Mr. Norcini has noticed (and charted), I will repeat what I said last December when Professor Fekete and others got excited about (alleged) backwardation in gold, which is that the phenomenon was largely the result of falling interest rates and the use of illiquid spot month contracts to perform the spread or basis calculations.

First let’s talk about interest rates. With gold (and silver to a lesser extent), one of the “costs” of holding inventory is the interest foregone on holding cash that could otherwise be invested. Not only that, but in comparison to other commodities, the storage, insurance and transportation costs of gold and silver are minimal. Indeed, this is one of the pillars why gold is money. Thus, there is a direct — although not proportional — relationship between the gold basis and interest rates (on fiat money). Namely, the lower the rate of interest (in the case of gold it is appropriate to use LIBOR as the rate of interest), the lower the spread in gold.

For example, LIBOR fell precipitously and so did the gold basis last December. The 1-month LIBOR went from around 4.50% on October 13 to 0.45% on December 30, a historic drop of 90% in under 3 months. With the opportunity cost of holding gold for 1-month being essentially zero, it is no wonder that the 1-month LBMA forward rate (which is essentially equivalent to the spread between a spot COMEX gold contract and a contract one month in the future) fell from 2.16% to 0.16% during the same time. Moreover, 1-month LIBOR peaked around 0.55% in the middle of March 2009 after bottoming in January and has since dropped back down to 0.45%. As a result, the LBMA forward rate, COMEX futures spreads, and even the traditional basis calculation (cash vs. front-month futures) have shown a shrinking contango. This same pattern is clearly visible in Mr. Norcini’s charts.

Bottom line, for a basis or spread trend in gold or silver to make the most sense, we must recognize and isolate the influence of interest rates. This is something that I have been researching and analyzing for a while now and I hope eventually to share the summary of my work with all of you (details and trading strategies will be reserved for Founding Members of Metal Augmentor). In the meantime, I am happy to share these observations with Dan Norcini and everybody else doing important work on the gold/silver spread and basis.

The next point I’d like to make is that even though Mr. Norcini talks about the front month and outer months of COMEX gold, what he is actually comparing are the delivery month (April ‘09) and the active front month (June ‘09). This is important because the delivery month futures are typically quite illiquid. When they are not illiquid, it usually means something is afoot and that it might then make sense to use the delivery month in spread and basis calculation. There have been occasions in the past when this was the case. Otherwise, the general rule is that illiquid equals inaccurate.

For example, yesterday, April 21, the April ‘09 contract traded 655 times compared to 75,861 for the June contract, a difference of 100-to-1. Even if we assume these trades occurred only during the pit session — about 5 hours — that means the April contract traded at most once every 30 seconds (although there were several instance when it did not trade for many minutes) while the June contract traded much more frequently. Thus, any particular trade in the April contract cannot be effectively compared to any particular trade in the June contract. Moreover, Mr. Norcini appears to be using daily closing prices in his charts and analysis, and these prices are often not even based on actual trades, especially for contracts other than the active month (currently June is the active month).

From the NYMEX rulebook:

AMENDMENTS TO COMEX RULES 4.91, 4.92 AND 4.93

Rule 4.91 – “Futures Settlement Prices”

(a) Active Month. The settlement price of the most active futures contract month shall be the average (rounded off to the nearest price tick) of the highest and lowest prices of the trades reported during the closing period, except as otherwise provided in this rule or in Rule 4.93 (”Use of Discretion to Establish Settlement Price”).

(b) In All Other Delivery Months. The settlement prices shall be determined based upon spread relationships between and among contract months, which relationships shall be determined in the judgement of the Settlement Price Committee with: (a) greater weight given to spreads executed later in the trading day in large volumes, and (b) lesser weight given to (i) spreads traded in lesser volumes, (ii) spread bids and offers actively represented later in the trading day, and (iii) spread transactions, bids and offers from earlier in the trading day.

In other words, the closing price that Mr. Norcini is using for April COMEX gold is “determined in the judgement of the Settlement Price Committee”. So much for no opportunity to manipulate spreads! Even if we don’t subscribe to conspiracy theories, it should be easy to see why using such “prices” can be problematic when we are dealing with sensitive calculations like spreads and the basis. This is why I no longer use “closing” or “last” prices exclusively in my analysis, preferring to use actual trading data whenever possible.

To better illustrate what I’m saying, just take a look at the open-high-low-close of the April and June ‘09 COMEX for yesterday, April 21:

Open:  886.9 - 886.5 (0.3 backwardation)
High:  895.1 - 896.4 (1.3 contango)
Low:  880.7 - 879.5 (1.2 backwardation)
Close:  882.1 - 882.7 (0.6 contango)

As you can see, there was quite a bit of variation in the prices of these two contract during the trading day, mostly because of the illiquid nature of the April contract (this illiquidity would also impact the accuracy of the April “closing” price determined by the Settlement Price Committee). Still, I can find plenty of relevance and importance in the fact that the spread between the high and low prices had an absolute variation of $2.50 whereas the closing price implied a spread of just $0.60. That leaves plenty of room for error.

The last point I’ll make is that charting the spread between two specific futures contracts over time will usually result in some degree of convergence between the prices — a narrowing of the spread — simply because gold spreads are not entirely linear. Why not? The same reason that interest rates are not linear but rather trace out an “interest rate curve”. Specifically, comparing two contracts such as June and December ‘09 COMEX gold over a period of time such as one or two years will involve each contract moving through a particular slope of the “spread curve” at different times. Since the curve is typically flatter further out in time, the impact on spreads is less noticeable (without making appropriate adjustments) the further away both contracts are from expiration. Conversely, the curve is steeper closer to expiration, and the impact of the differential movement of the contracts through the curve becomes more noticeable (without making appropriate adjustments). The net result is that a chart plotting the absolute value of the spread between two forward prices in gold, or between a forward price and the spot price, will always seem to converge over time even though the spread may actually be constant. I bolded that statement because a number of people I helped in the past to understand and track the basis have made this common but fundamental mistake, essentially rendering as meaningless their analysis of the basis or spread in gold and silver.

Now, please don’t get me wrong, there is still some value in the types of calculations done by Mr. Norcini and others as they can show roughly the relative size of the spread or basis over intermediate periods of time. It’s just that we cannot use this method to make accurate estimations of the basis over either very long time periods (more than a few months) or short time periods (less than a few weeks). That leaves quite a small window where this type of calculation is meaningful, but it is still a window nonetheless.

One solution to this small window is to create separate layers of filtering to (1) remove price discrepancies and trading artifacts associated with contract illiquidity, (2) adjust for the relative level of interest rates, and (3) normalize the spread curve to allow direct comparison of prices for contracts expiring at different times. Of course the simplest way to deal with several of these issues is to use a robust spot price to anchor one side of the basis calculation, but alas such price data is reserved for bullion banks and not available to mere mortals like us. Regardless, the research I have conducted to date, while not conclusive or ready to be shared, does support the notion that the contango has markedly shrunk over the past year independent of interest rates or other inputs and that we have indeed come close to “true backwardation” on a number of occasions. Right now is just not one of them (although tomorrow could be different, so stay tuned).

silverax Uncategorized

Gerry, a gentleman with whom I have corresponded in the past, has written a smart commentary on the present monetary tug of war.

I call this uncertainty about inflation versus deflation “indeflation”.  It is a combination of the two words but it is also a play on the word indecision.  The fact is that most people (many economists included) do not understand what inflation really is.  I define inflation as the increase of money and credit in excess of the growth in productivity.  Deflation is the opposite … a decrease of money and credit.  Inflation is not a general increase in the level of prices … which is merely a symptom of true (monetary) inflation … as most financial “experts” would have you believe.  The fact is that the world’s fiat currencies have been centrally managed by the various world central banks since the early 1970’s and one could argue that this process has occurred since 1944, 1933 or even 1913.  The most influential currency manipulator during this period was the US Federal Reserve (Fed).  In the past 40 years the Fed has increased money and credit greatly in excess of any increase in productivity in the US economy.  Since the US dollar is the world’s reserve (fiat) currency this led to inflationary pressures in the US but even more so in the rest of the world.  This increase in money resulted in increasing prices of all goods and services but especially so for commodities which saw a top in prices in early to mid 2008.  Since that time we have been seeing falling commodity prices.  How can that be since the Fed has continued to increase its monetary base since then … even more than doubling this monetary base over that period?  Many financial gurus were calling for prices and wages to explode upward in an inflationary spiral reminiscent of the 1970’s.

The reason for this discrepancy is that the fall of Lehman Brothers and the bailout of AIG in the fall of 2008 resulted in a massive de-leveraging of the world banks and shadow-banks which is ongoing today.  Remember that I said above that inflation is the increase of money “and credit”.  It is the function of our banking system to take the monetary base created by the world central banks and lever (or “gear”) this money many times over through bank credit.  Since the 1990’s this process went completely out of control and the banks geared to unimaginable levels using both legal and illegal methods.  This has now reached a point where the banks have created so much credit that the world is awash in debt.  In fact there is now so much debt in the world that the world income base cannot support the interest payments required to service the debt … let alone try to pay off the principal.  This has resulted in a period of destruction of credit which by my definition above is deflation.  However, this deflation has not yet resulted in a general decrease in the level of prices and wages.  Why not?

Although the Fed has more than doubled its monetary base since the start of 2008, this new money has largely been quarantined or sterilized on the Fed’s balance sheet.  In addition it is highly likely that the amount of new money created by the Fed during the past year (although massive) has not kept pace with the destruction of credit that we have seen during that same period.  As a result, prices of most assets (housing, stocks, commodities and consumer discretionary goods) have either fallen (sometimes drastically) or remained flat.

I actually don’t think credit is contracting at this point so much as the availability of credit is decelerating. It was the acceleration of credit availability that fueled much of the world’s (not just in the U.S.) discretionary spending. All we’ve had is a mere stall in credit so far yet it has opened up a fearsome economic chasm. Should we get a meaningful contraction in credit there would be little debate about deflation vs. inflation given the number of people soon selling pencils on the street corner.

It will probably be a while before discretionary spending comes back (those of you who think it will never come back, please save your breath as we’ve all heard the argument before) and that could realistically reduce global GDP by 10%. A large portion of this reduction would probably be offset by government discretionary (stimulus) spending at least until governments were unable to borrow any more because they have displaced or crowded out all borrowing in the private sector. That is when (and only when) the odds of a hyperinflationary or deflationary monetary collapse will approach 100%.

Will food, energy and health care prices continue to rise in the meantime? I’m not entirely convinced. It is possible that the cost of such necessities will be rangebound during the next few years at elevated though not continually rising levels. Readers of Metal Augmentor know I’m talking about the model recently advanced by trader George Slezak. In such a model oil could trade around $50, corn at $5, silver at $15, etc. with periodic sojourns up or down but prices would eventually return to the mean. Hardly exciting but such price levels would be profitable for all but the most marginal producers (I’m looking at you, most of the Canadian oil sands) and this would be quite an accomplishment given the difficult economic conditions. In such a scenario gold and silver would have great potential for price rises and price spikes but the timing would not be certain. There would probably be substantial downside risk for leveraged gold and silver traders, speculators, explorers and miners.

In any case, those are my thoughts on “indeflation”. The odds of the situation continuing at the present level of uncertainty for several years are frankly not very high but it is entirely possible that we will have a temporary, partial and weak recovery a few months ahead followed by renewed economic decline and another weak recovery and so on and on. That might very well look in retrospect like a prolonged period of “indeflation” and it could also explain the prices of essential commodities trading at elevated levels without necessarily embarking on a new bull market (while not being in a bear market either).

silverax Monetary Links, Uncategorized

I would like to comment on the recent price action in silver. The white monetary metal has apparently broken out of its slumber and now seeks to make a run at the critical $14 level. Breaking through $14 will presumably unleash quite a bit of pent up momentum as well as invalidate the technical pattern of lower highs and lower lows originating in March 2008. A successful breakout would mean a near term target in the $16 range and an ultimate target above $18. On the other hand, failure may reinforce a trading range bound by $14 on the upside and $9 on the downside. The next few weeks are likely to be critical.

Physical Demand Is Where It’s At

On the positive side, silver seems to be getting solid physical demand. Backwardation continues at the LBMA with the shorter forward rates being the most backwarded. This is a sign of substantial demand in the spot market and especially in the case of transactions clearing through the LBMA. On Friday, the LBMA 1-month forward rate was quoted at negative 0.375% (annualized) while the 12-month rate was 0.000%.

This is very significant and even historic but we should not get carried away. For one, LIBOR rates continue to be very low on a historic basis (see my recent commentary on COMEX gold backwardation last December). On the other hand, LIBOR has actually been climbing the past few weeks even as silver forward rates continued to sink into backwardation. Still, the backwardation needs to be seen in a larger context. For example, a negative 0.375% forward rate in 1 month equates to a price difference of less than 1/2 cent per ounce. In other words, if spot silver is quoted at $13.000 then 1 month forward silver is being quoted at $12.995. For most purposes this difference is irrelevant. Gold, in contrast to silver, has now returned to slight contango at a rate consistent with historically low interest rates. This is the case at both the COMEX and LBMA.

Physical demand for silver has also been obvious when we look at the holdings of the Barclays silver iShares ETF, SLV. The metal holdings of SLV jumped by 10 million ounces at the end of January and another 3 million ounces at the beginning of the past week. Yesterday, however, the “ETF basis” of the SLV shrank substantially and is no longer indicating a significant NAV premium (which I call “ETF backwardation”). Meanwhile, the gold ETF (GLD) is now essentially trading at par, so for now investor demand is presumably being met from existing ETF shares. I will post charts for Metal Augmentor subscribers soon.

Moving on to retail bullion demand, I am still seeing signs that it remains moderate. Premiums on all but American Eagles are declining and dealers appear to have sufficient inventory. If anything, silver inventory appears to be better than gold inventory.

Seasonal Factors

Also positive for silver is the seasonal price pattern that usually remains strong between now and May, although this period can also be very volatile with large moves up and down. On the other hand, we haven’t seen the seasonal pattern produce strong rallies 2 years in a row. Intermediate peaks were made in 2004, 2006 and 2008 with prices staging strong moves during each spring. In 2005 and 2007, however, prices remained under pressure and were anything but impressive. On average the 2005 and 2007 rallies, if we can call them that, petered out during February. Will 2009 be more like 2007 or 2008?

Commodity Market Sentiment

On the negative side of the ledger we have the poor sentiment for commodities in general. There are valid reasons to suspect that the grain complex may again be running out of steam and is in imminent danger of revisiting the early December lows. Oil meanwhile looks set to succumb to $40 and this time some of the outer months may get dragged below that level as well. In the past few weeks we have witnessed the spread between forward months shrink while the contango between the spot month and the next most active month has remained large. One interpretation of this is that the forward market for oil is starting to coalesce as participants increasingly discount the prospects of an immediate sharp recovery. It is very possible that yet another capitulation will be required in oil before we get a final bottom. I still believe that bottom will be made as contango returns to oil and ultimately reaches a historic extreme in excess of 50% in the outer months. In the meantime, we could see a new round of investment funds temporarily fleeing the commodity sector and this would have a negative impact on the price of silver in the short term.

Stock Markets and the Fleeting Stimulus Euphoria

The stock markets may also be in for a rude awakening in the next several weeks given the unreasonably positive reception afforded to the $900 billion stimulus package currently making its way through Congress. Unfortunately, only a small fraction of this bill in its current form will provide an economic boost this year and even that is debatable.

The problem with the U.S. economy is that a large segment consists of consumption driven by growing personal and mortgage debt. There are several methods that could reasonably “fix” this problem but none of them involve the type of pork-barrel spending that is littered throughout the American Recovery and Reinvestment Act of 2009.

One method that could work is to offset declining consumption with an increase in private-sector investment. This could be accomplished in the short term by providing large tax credits and incentives for targeted personal and business spending. In the long term, however, the most reliable way to increase investment spending is to decrease government spending. This will not be easy to do and therefore an increase in investment is unlikely to offset a permanent decline in consumption.

Another method would be to boost personal incomes in a manner that encourages the paring down of existing debt while also sustaining consumption at near-current levels. For example, what about a voluntary interest rate cap on credit cards and personal loans combined with a federally-insured fund to cover defaults as well as revisions to federal bankruptcy laws? In effect, the insurance fund would make banks whole on a portion of loan principal as long as bank policies conform to federally-mandated parameters. Such a program would no doubt require a major funding commitment but very little money up front. If run properly (always a crapshoot whenever the government is involved), it could potentially break even and turn out to be budged neutral. The greatest benefit, however, would be to shatter the destructive cycle of frozen lending that can only lead down a one-way street much like the idea that a higher savings rate can bring the current financial mess back under control.

Similarly, a federal program that addresses the affordability gap between current housing values and personal incomes may constitute effective stimulus. There are many niche opportunities in this area that could conceivably be run in a budget neutral manner over the long term in addition to providing qualitative benefits. Why not enroll tenured federal, state and local government employees — especially teachers, police and firefighters — in a special home ownership program that assists with housing in the communities they serve? Membership in the program could be limited to those employees consistently exceeding performance guidelines.

I realize there are valid libertarian and free market arguments against such government programs but the alternatives being considered, much less those likely to be implemented, are far worse. Libertarian and free market mechanisms can no longer do anything to help avert a meltdown. In fact, they would hasten a meltdown with a very good chance that it becomes terminal, resulting in extremely dire social consequences. Moreover, an increase in savings at the expense of consumption is a dead-end street — the result would look remarkably similar to the Great Depression. At a minimum, it would resemble Japan during the past two decades. I know many of you believe such an outcome to be inevitable regardless of the attempted cure, but (rapture aside) I would argue that it might be worthwhile to at least delay Armageddon as long as possible.

Othen than “creative” solutions including a return to the gold standard, government spending on infrastructure comes closest to having stimulus potential that addresses the gap between personal incomes and consumption levels. Unfortunately, both the House and Senate versions of the stimulus bill have less than $200 billion for infrastructure and most of that is long-range stuff not likely to be spent before 2010.

In summary, the current stimulus bill is too cowardly, too little and too late. It is much closer to what Hoover was doing in the early 1930s than to what FDR did during his first 100 days in office. I do think Obama still has a chance to get it right but he is going to have to step up to the plate, pick his battles and go for broke. I suspect there is a good chance this still happens within the next 60-90 days especially once it becomes clear that the American Recovery and Reinvestment Act of 2009 is DOA (dead on arrival). In the meantime, however, the markets including gold and silver could react very badly to what could soon be known as the American Ass Act of 2009 (note that “Recovery and Reinvestment” can be abbreviated as “REAR” which is too nice a term for something so vulgar).

Bullish Sentiment

The second-to-last factor I am going to examine tonight is bullish and bearish sentiment within the gold and silver camp. As I’ve mentioned a number of times previously, I don’t believe contrarian sentiment is typically a good way to assess short term trends in the gold or silver markets. In particular, I find much of what Mark Hulbert has written on gold to be of minimal value. Most of the time, that is. Long term charts are much better tools for timing contrarian trades: sell while gold and silver undergo parabolism and buy when prices have plunged 25% or more. If prices plung 35%, buy more. If they plunge 50%, buy some more.

Having said this, there are times when Hulbert’s approach has proven to be prophetic. Typically this has been around major price inflection points. Gold is presently at such a point: namely, the shiny metal of kings needs to surmount the $938.20 level basis the April 2009 COMEX contract. Actually, let me rephrase that. Gold must surmount $938.20 basis the April 2009 COMEX contract. As big as the $888 level might have been, $938.20 is an order of magnitude more important.

This is where Hulbert starts to matter. Unfortunately, the subtitle of his latest report on sentiment within the gold timing newsletters is not encouraging: Gold’s short-term trend likely to be down. Hulbert bases his prediction on the 60.9% bullish sentiment of gold timers as of January 27, which is quite bullish by historical standards. If gold were running in an unopposed uptrend, such bullishness would hardly make a difference. But gold is facing down (or rather, up) the critical $938.20 level and it is a very big deal, akin to 14 for silver. Precisely how the monetary metals behave around these prices is likely to determine their fate for the next few months. In this regard, Hulbert’s contrarian signal is definitely not a positive development for gold and by extension for silver. And although silver has shown some independence from gold lately, a failure by gold to take out $938.20 could very quickly lead to a major capitulation by the hot-money longs in both gold and silver.

The Dollar Connection

For reasons outlined in my prior commentary addressing Central Bank Liquidity Swaps, the U.S. dollar could turn out to be well-supported at current levels and may even find itself moving higher assuming the relationship I found between the swaps and Treasuries turns out to be more than just a figment of my imagination. True, gold and the dollar have recently moved in unison but this could revert back to the normal inverse relationship in a hurry. At a minimum, gold may come under pressure from a rising dollar and silver is unlikely to maintain upward momentum if that happens.

Conclusion

The monetary metals face a very critical test the next fortnight and I expect both will come out of it charging hard. The question is, of course, will the charge be uphill or downhill? If downhill, I’m betting (odds = at least 10%) that gold will bottom below its October 2008 level ($680) while silver could once again trade under $10 (but hopefully not below its own October low of $8.40 — reasons for such hope will be forthcoming).

Subscribers of Metal Augmentor are already aware of my “covered buying using put options” strategy for taking advantage of the opportunity to buy gold at what could be a once-in-a-lifetime price. In addition, I will be sharing strategies for buying silver if and when the time is right.

Conversely, should April COMEX gold blast past $938.20 and spot silver past $14, both should continue to move substantially higher from there. I don’t currently have specific trading ideas to take advantage of that possibility but I might still come up with some. In any case, I presume most of you are already positioned for a major rally via your core investment holdings. For now, I would actually advise against adding long exposure pending confirmation that an intermediate rally on the scale of 2006 or 2008 is at hand. Such a rally would have a target for gold above $1200 and for silver above $18. Unless and until the path is clear, investment funds deployed in anticipation of such prices being achieved should be considered highly speculative.

silverax Uncategorized

Man, what a relief! I don’t exactly know how I was able to recover most of the blog but it looks like I have. I guess it was sheer willpower. Images and other files attached to postings don’t seem to be working for now but hopefully I can fix that soon. Also, some posts show there are zero comments on them but when you click on the post all the comments are there. Another thing is that some of the posting categories and links are not showing up but I think I can add them manually so that is not a huge deal.

Speaking of comments, I have disabled user registration and login in favor of an arguably better method. The first comment that you make has to be approved by me (I’m not sure if the new blog will recognize old comments). Depending on where I am and what I am doing that could take several hours or days (I’m going to make an extra effort to stay on top of it). As long as you use the exact same name and email subsequently, your comments will post automatically. I’m expecting that one less set of registrations and logins will be less confusing as well.

Eventually I will be moving and archiving the protected posts for GSUL and Metal Augmentor subscribers from this website over to the blog at the Metal Augmentor site (www.metalaugmentor.com/eforum). If you are a subscriber, you should have received an email last week with a user name and password for that site. If not, please make sure to unblock your spam or email filter so that you can receive messages from info@metalaugmentor.com and in the meantime you can contact me to get the user name and password.

silverax Uncategorized

Just a couple of days after I was able to get most of the spam attacks on the site under control, the company that hosts this website, IPOWER, was apparently hacked and many accounts including mine may have been compromised. The passwords for some 700,000 websites had to be changed as a result. I’ve thought very hard about changing hosting companies at least 3 times in the past couple of years but this looks to be the last straw. Fortunately I noticed the problem fairly quickly but any site visitors on Tuesday January 20, 2009 should make sure they are using updated virus software (I use Bit Defender which immediately alerted me).

Meanwhile, IPOWER has apparently implemented some security changes that are preventing me from updating the blog and blocking user comments as well. I’m trying to get the blog back to working but for now it is completely frozen. In the meantime, I am going to try setting up a different blog while I decide what to do long term. As a last resort, I will be posting comments on this page.

One bit of good news for subscribers of The Metal Augmentor is that we are finally starting to provide some updated content for the service although the website is still not fully functional yet. Please go to www.metalaugmentor.com/updates.php for the latest information and content. We are going to try running a blog over there as well, and I don’t expect the same problems as I’ve had here because we selected a much more reliable hosting company for that site.

Fortunately, the blog itself has been backed up and all posts and comments are preserved. I’m not sure, however, that I will be able to fully restore everything. The blog archive content is not available while this page is displayed but I will be taking down and putting back up this page over the next few days so more readers will be able to see it.

For your reference, here are the links to the current pages with information:

Main Site Index Page: http://www.silveraxis.com/index.html

Blog Page: http://silveraxis.com/todayinsilver/

If I am not able to get the original blog going again, I will have to start with a new blog in which case I will be posting the links to the new blog on this page.

silverax Uncategorized