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Can "Naked Shorts" Kill Metal Prices ?
storm888
Posts: 11,701 ✭✭✭
I suspect they can.
SHORTING of shares/commodities/currencies is a legitimate trading strategy.
Short-Sellers can provide added liquidity and robust volatility to markets. (In
China, SHORT sales are prohibited; we have seen their market "correct"
by 50% this year.)
NAKED SHORTING is akin to counterfeiting and is prohibited by SEC Regs.
A legitimate SHORT, borrows ETF shares - like SLV and GLD - from his broker,
and resells them. He is betting that the price of the shares will fall and he
can buy the shares cheaper; he will then "buy to cover" and the shares are
returned to his broker and their owners.
A NAKED SHORT, does NOT secure borrowed shares BEFORE he sells them
into the market. He does not deliver the shares he has sold, and hopes
he can buy legitimate shares to cover his counterfeiting at some future
time.
In theory, NAKED SHORTS can drive almost any security towards ZERO
with relatively little capital. Numerous companies have been driven under
by the criminals. Until recently, the SEC has been "flexible" about enforcing
its Regs on the issue.
Last month, the US House and Senate, in league with the SEC began issuing
subpoenas to "players" in the NAKED SHORTING scandals. While their primary
focus has been on "damage done to financial institutions" by NAKED SHORTS,
some Reps and Senators hope to expand the scope of their inquiry.
To learn how the SCAM works, see:
businessjive
To learn about some of the major players in the SCAM, see:
Player
Players
Folks who have legitimate evidence of violations can contact their
Congressman and Senators. Reports can also be filed at:
enforcement@sec.gov
/////////////////////////////////////////////////////
The ETFs are very likely being targeted for action by the criminals.
Whether you are LONG or SHORT the ETFs, you have a stake in
the orderly, efficient and lawful operation of the markets.
The SEC and lawmakers will take action, but they will not do so
unless they are told to by their constituents.
////////////////////////////////////////////////////
Cohen has been one of Cramer's primary backers. If either Cramer
or his tout-sheet-flacks at
thestreet.com
begin to take "an unusual interest" in PM related issues, their "opinions"
should be monitored closely.
...............................................
SHORTING of shares/commodities/currencies is a legitimate trading strategy.
Short-Sellers can provide added liquidity and robust volatility to markets. (In
China, SHORT sales are prohibited; we have seen their market "correct"
by 50% this year.)
NAKED SHORTING is akin to counterfeiting and is prohibited by SEC Regs.
A legitimate SHORT, borrows ETF shares - like SLV and GLD - from his broker,
and resells them. He is betting that the price of the shares will fall and he
can buy the shares cheaper; he will then "buy to cover" and the shares are
returned to his broker and their owners.
A NAKED SHORT, does NOT secure borrowed shares BEFORE he sells them
into the market. He does not deliver the shares he has sold, and hopes
he can buy legitimate shares to cover his counterfeiting at some future
time.
In theory, NAKED SHORTS can drive almost any security towards ZERO
with relatively little capital. Numerous companies have been driven under
by the criminals. Until recently, the SEC has been "flexible" about enforcing
its Regs on the issue.
Last month, the US House and Senate, in league with the SEC began issuing
subpoenas to "players" in the NAKED SHORTING scandals. While their primary
focus has been on "damage done to financial institutions" by NAKED SHORTS,
some Reps and Senators hope to expand the scope of their inquiry.
To learn how the SCAM works, see:
businessjive
To learn about some of the major players in the SCAM, see:
Player
Players
Folks who have legitimate evidence of violations can contact their
Congressman and Senators. Reports can also be filed at:
enforcement@sec.gov
/////////////////////////////////////////////////////
The ETFs are very likely being targeted for action by the criminals.
Whether you are LONG or SHORT the ETFs, you have a stake in
the orderly, efficient and lawful operation of the markets.
The SEC and lawmakers will take action, but they will not do so
unless they are told to by their constituents.
////////////////////////////////////////////////////
Cohen has been one of Cramer's primary backers. If either Cramer
or his tout-sheet-flacks at
thestreet.com
begin to take "an unusual interest" in PM related issues, their "opinions"
should be monitored closely.
...............................................
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
0
Comments
The Cramer Spin
Welcome!
Makes you sick, doesn't it?
<< <i>All right another Believer!
Welcome!
Makes you sick, doesn't it? >>
////////////////////////////////////////////////
I have worked on the issue for a decade.
Even though I have been SHORT much of the market for the
past couple of years, I still don't want the casino destroyed
by criminals.
Neither SHORTS nor LONGS can make money, if the peasants
decide that the game is fixed and refuse to play. That can
easily happen.
I knew it would happen.
Watch what happens in the next few nights to see if they sell it down again.
<< <i>Watch what happens in the next few nights to see if they sell it down again. >>
/////////////////////////////////////////
At the moment, there is no "public information" that tells us "they" are
"selling it down" unlawfully.
RegSHOThreshold
ALLof the ETFs are being watched closely by the SEC.
There are WIDE loopholes in the reporting requirments. The "clearing houses" are
required to file notices of Failure To Deliver (FTDs). This is an HONEST and RELIABLE
operation; and, is closely monitored.
The problem is that a small gang of hedge-funds working in concert, through their corrupt
brokers - and/or using their own brokerage - can and DO falsify delivery confirmations in
connection with trades that they make between themselves.
Crook A: Shorts ETF.
Crook B: Falsely Confirms Delivery.
Crook B: Shorts ETF.
Crook A: Falsely Confirms Delivery.
These are known as "private settlements," and NOBODY looks to see if any ACTUAL
shares were delivered. The ONLY check is against easily falsified "delivery tickets."
These tickets are almost NEVER audited by regulators.
Instead of two hedge-funds and their brokerages being in the mix, imagine the REALITY
that 10 or more are working together. This massive conspiracy makes it SUPER EASY
to totally destroy a share price.
The SCAM works best when pretend-media outlets - like thestreet and Cramer - pile
on and write unfavorable pieces about the targeted shares. Before the initial assault
is begun, corrupt class-action lawyers are recruited and told when they should file
bogus lawsuits against the targeted companies' principals; such filings further
depress the share prices.
The profits are HUGE and the risk of punishment is almost ZERO. Currency counterfeiters
go to prison for DECADES. Naked Shorts - counterfeiters of shares - make hundreds-of-
millions of dollars and are seldom punished. One irony is that the cost to counterfeit
currency to AAAA-standards is MUCH greater than the cost of setting up a MAJOR
Naked-Short SCAM that can totally destroy a company and wipeout its shareholders.
A simple step towards a solution is to PROHIBIT "private settlements" of ANY trades;
LONG or SHORT. If a regulated clearing-house certified ALL deliveries, the fraud would
quickly be stemmed.
The best early warning system of a SCAM is to watch the "financial press." The biznez
is liberally salted with criminals who write good/bad stories/opinions at the will of their
real employers. If the bashing gets out-of-control, it is a good sign that "something is up;"
and it probably won't be your shares.
Nah, the little guy can still accumulate with very little long term risk. The little guy can't move 50,000 shares or sell 10,000 ozs all at one time but he/she sure can buy a couple of 10 ozers or a roll every month or so for a few years and pick up an GAE or two every year. It is not a formula for instant success but it does give a fair amount of goodness for little pain. What's that quote, "Overnight success only takes about 10 years."
Meddlers
How many people know about the lawsuit that Blanchard Co. brought against the U.S. Govt., U.S. Fed, Amerigold, and a group
of brokerage houses? There is a video on Gata's website that goes into it.
They will likely finalize the rules before the end of 2008.
sec.gov
////////////////////////////
Cox: SEC to propose short sale rule in weeks
Tue Aug 19, 2008 2:32pm EDT
By Karey Wutkowski
WASHINGTON (Reuters) - The top U.S. securities regulator plans to propose a new short selling rule in the next few weeks which would be broader than an emergency order covering just 19 financial stocks which ended last week.
U.S. Securities and Exchange Commission Chairman Christopher Cox said on Tuesday the proposal "will focus on market-wide solutions." He said it is not intended to have any impact on the direction of stock prices.
Cox also said the agency is still considering proposing that investors be required to publicly disclose substantial short positions in stocks. Substantial long positions in stocks already have to be disclosed.
"Our proposal will be designed to ensure the smooth functioning of the markets," Cox told reporters. "We support the equally important role of bets on the upside and on the downside."
The SEC imposed an emergency rule on July 21 that required short sellers to pre-borrow stock in mortgage finance giants Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and 17 major Wall Street firms such as Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) before executing a short trade.
Short sellers arrange to borrow shares they consider overvalued and sell them in hopes of making a profit when the price drops. It is a legitimate form of trading but often blamed when a company's shares fall.
The SEC's emergency rule was aimed at cracking down on illegal naked short selling, when an investor sells stock that has not yet been borrowed.
Cox said on Tuesday that failures to deliver stock "were reduced substantially" for the stocks covered by the emergency rule. "It was a very effective order from that standpoint," Cox said.
He said the SEC's emergency rule was never intended to prop up the stock prices of the 19 companies. "We expected and intended to have no impact whatsoever on the direction of prices," Cox said. "That's not the purpose of regulations."
Investors who bet on falling stock prices also had been required to deliver the securities by the settlement date.
Short trading on the 19 stocks reverted to rules governing other shares on August 13.
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)
© Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
San Diego, CA
<< <i>That is more than enough time for the big boys to find a way around it. >>
////////////////////////////////////
The elimination of "private settlements" removes any "way around it."
If enough folks email Cox and tell him they "will boycott the exchanges
unless private settlements are prohibited and ALL transactions are settled
through a regulated clearing house," most of the problem will be solved.
The SEC will make the required changes, if the retail investors demand it.
The names and email addresses are listed in Ted Butler's latest commentary on market manipulation.
Since the regulators seem to be complicit, the best way around manipulation is simply to buy the physical metal. Problem solved. No muss. No fuss. Let them get their silver elsewhere.
I knew it would happen.
Edited to add that Cramer is an idiot, a shrill. He knows little about supply and demand nor about the legitimate analyzing of companies. He's a good fade.
<< <i>Actually, the Commodity Futures Trading Commission is the place to complain for the PM market.
The names and email addresses are listed in Ted Butler's latest commentary on market manipulation. >>
//////////////////
The ETFs are "policed" by the SEC.
I don't believe so, but it might depend on your definition of what "kill metal prices" means.
Using silver's recent price decline as a starting point, we've seen silver drop from something around $21 to $13. Assuming that naked shorts were a primary culprit, those positions have now been covered as panicky sellers exited the market, right?
So, with silver at $13, let's say that another round of naked shorts try to hammer the price all over again, and the price drops similarly to $8.
Let's suppose that the naked shorts can accomplish this type of move at will. With this assumption, the price can be taken all the way to $1, until it is no longer profitable to short silver.
At that point, what happens? Well, at some point long before the price gets to $1, I have to think that the physical supply of silver would dry up. All else being equal, mining operations wouldn't stay in business at that level, and nobody would be selling at the spot price.
That might be where we are now. Most people who buy silver at this level probably think that the price can't go much lower after such a dramatic selloff. In a manipulated market, who really knows? But, at some point even manipulation can't overcome common sense, and common sense tells me that silver can't make it down to $1.
Similarly, common sense tells me that silver should maintain some relationship (within a range) relative to other assets. If a silver shortage becomes apparent, then this would obviously cause the price to rise. What should the price be? I don't know, but it should make sense relative to the price of rice or corn or gasoline.
Now the kicker. The dollar influences all. So take all of the commodities, and they should all be worth something relative to the dollar - pick your own price point. Devalue the dollar, and they all go up. Devalue the dollar again, and they all go up again.
Now, throw in some more naked shorting on silver. Does the price go down again, even though the dollar is being devalued? At some point, common sense will make the market, and the manipulators will lose. That's what makes sense to me.
I knew it would happen.
from earlier in this thread, a good explanation of naked shorting
I think that the main difference is in the anonymity of the counterparties in naked shorting, and in the ability to create a position with no one on the other side.
In a futures trade, it's a trade that occurs when the buying & selling offers are matched up.
A naked short order is as if a futures sell order were being treated like a completed trade, even before it finds a buyer. And this gives the illusion that a lower price has been established - when it has not.
I knew it would happen.
Doesnt this sentence contradict your premise? Why would their market go down if it wasnt being shorted. We all know shorting is the only reason why prices drop.
Knowledge is the enemy of fear
i have wanted to ask the question, too since the Shanghai exchange does trade gold now?
/////////////////////////////////////////////////////////////
The naked-short always has his associate on the "other side."
Back and forth, perhaps between a dozen or more accounts; "buying/selling" invisible shares from/to each other.
<< <i>In China, SHORT sales are prohibited; we have seen their market "correct" by 50% this year.
Doesnt this sentence contradict your premise? Why would their market go down if it wasnt being shorted. We all know shorting is the only reason why prices drop.
//////////////////////////////////////////////////////////////////////////////////////////////////
Shorting is far from "the only reason" prices drop.
China tanked for both fundamental economic-reasons, and because
the liquidity that is provided by SHORTS buying-in does not exist.
When a SHORT buys-to-cover, he is providing a temporary floor to the price,
from which the price can rebound.
<< <i>
<< <i>In China, SHORT sales are prohibited; we have seen their market "correct" by 50% this year.
Doesnt this sentence contradict your premise? Why would their market go down if it wasnt being shorted. We all know shorting is the only reason why prices drop.
//////////////////////////////////////////////////////////////////////////////////////////////////
Shorting is far from "the only reason" prices drop.
China tanked for both fundamental economic-reasons, and because
the liquidity that is provided by SHORTS buying-in does not exist.
When a SHORT buys-to-cover, he is providing a temporary floor to the price,
from which the price can rebound. >>
so shorts are good thing as long as they aren't naked in this repect?
/////////////////////////////////////////////////
Naked Shorting is a criminal enterprise, much akin to counterfeiting currency;
but, sadly, it ia rarely prosecuted as such.
There are ONLY two reasons to HATE shorts:
1. They don't show up.
or......
2. They show up naked.
Liquidity and volatility are the signs of vibrant markets. Legitimate SHORTS deliver on both counts.
<< <i>There are ONLY two reasons to HATE shorts:
1. They don't show up.
or......
2. They show up naked.
Liquidity and volatility are the signs of vibrant markets. Legitimate SHORTS deliver on both counts. >>
What about naked longs who drive prices up?
//////////////////////////////////////
Failure To Deliver on the long side is not generally a problem.
Legit sellers deliver legit shares to LONGS.
linky
td
<< <i>Can't vouch for this, but you might find it interesting:
linky
td >>
I'll vouch for it!!
Absolutely true and probably the last Ace the manipulators had up their sleeve.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>'What about naked longs who drive prices up? "
//////////////////////////////////////
Failure To Deliver on the long side is not generally a problem.
Legit sellers deliver legit shares to LONGS. >>
I'm talking about buyers who don't take delivery, not those that do.