2011-12-17 — implode-explode.com
Here is the latest from Ted Butler on SLV naked short position (via Ed Steer's Gold and Silver Daily for 12/17/11). This is probably a major factor in the recent price damage to precious metals (especially silver).
For those not familiar with this skullduggery, the big "trusts" like SLV and GLD have a sort of "loophole" where the trustee can issue new shares even before they acquire the metal to back them. This is the same as naked "short selling" of the shares -- selling shares you do not even have, and have not even borrowed from someone who does have them! The upshot is, this (by definition) ends up depressing the price, in a situation where the trust going out and buying more metal should be BOOSTING the price. So it is actually a "double-whammy" effect of price suppression.
If the regulators were not absent, they might propose something like a 1-5% limit on the number of shares the trustee can do this for. "Closed-end" trusts, like CEF or the Sprott trusts PHYS and PSLV, do not have this built-in flaw (that's why they trade with a premium--there is a line to "get in", knowing that the metal is, by contract, present in the trust for every single share).
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