Silver Longs Refuse to Budge

[FunnyMoney]

Silver Longs Refuse to Budge

Silver longs refuse to cooperate with silver short position holders as silver crosses the $26 and $27 areas of minor resistance, settling in just under 28.82 US dollars per ounce while pressure mounts toward $29. Shorts had been told by their technical advisors that silver bulls would take paper profits and allow short contracts to be closed out in the 24 to 26 dollars and change levels. However, it seems more likely that newbies to the silver trade had never actually touched a real silver coin in their lives and may have slept through class during study of historic monetary principals. That's ok though, as silver appears ready to repeat the lesson once again.

The price of silver marched right through 25, 26 and 27 dollars in a relative blink of any eye, without much concern over a slight bounce in the USD index, and silver shorts finally accepted this as confirmation that quantitative easing doesn't do anything to help increase mining supplies of precious metals. Silver for bulk delivery now stands ready to pass $30 per ounce and other than the reaming shorts and the now unemployed former silver traders at the bullion banks, few have noticed. Longs refuse to budge unless it means standing for delivery of the severely undervalued precious metal.

Gold gained some attention passing its former all time nominal high of $850 and then additional recognition with the big purchase by India's central bank at just over $1000. Silver in turn, prepares to request a trailer and then a mainstream showing once the all time nominal high at $40 is cleared and then finally when fair valuations are reached, somewhere beyond 3 digits.

Twenty-four hour Asian trading desks have been determined to collect any short term push downs as they play more of an accumulation game over any trading. Seasoned technical traders examine the data and see nothing out of the ordinary for the long overdue increase in silver levels based agaist the world's fiat currencies. For fundamentals, most safety conscious investors have actually touched the metal from time to time and understand the process of actual "hard honest work" that it implies versus the magic tricks played by the producers of today's currencies.

The magic tricks seem to be unwinding, but silver remains spring loaded.

[Ponce]

Once again..........the high is coming from overseas and the US market has no choise but to support it.......
but......I can see a profit taking special in the horison.

[Low_five]

Can someone please explain shorts and longs. Thx.

[Neuro]

Can someone please explain shorts and longs. Thx.
A short is someone who sells silver without having any silver, a long is someone who buys silver without having any money, unless he takes delivery then he is a freaking paranoid gold bug, who will have swap teams swarming his house for domestic terrorism reasons...

[osoab]

Can someone please explain shorts and longs. Thx.


Long (http://www.investopedia.com/terms/l/long.asp)


Investopedia explains Long (or Long Position)
1. For example, an owner of shares in McDonald's Corp. is said to be "long McDonald's" or "has a long position in McDonald's".

2. For example, buying a call (or put) options contract from an options writer entitles you the right, not the obligation to buy (or sell) a specific commodity or asset for a specified amount at a specified date.


Short (http://www.investopedia.com/terms/s/short.asp)


Investopedia explains Short (or Short Position)
1. For example, an investor who borrows shares of stock from a broker and sells them on the open market is said to have a short position in the stock. The investor must eventually return the borrowed stock by buying it back from the open market. If the stock falls in price, the investor buys it for less than he or she sold it, thus making a profit.

2. For example, selling a call (or put) options contract to a buyer entitles the buyer the right, not the obligation to buy from (or sell to) you a specific commodity or asset for a specified amount at a specified date.

[k-os]

I have always thought of "shorting" as if you are betting for it to fail.

I knew someone who was shorting the financial institutions when the SEC made it illegal to short them in '08. That was one of those "holy moly, this is IT!" moments for me that turned out to be nothing for everyone else. I figured banning short selling altogether would be one thing, but just for financials . . . fishy. The SEC said the ban was to halt market manipulation, but from my perspective, it's purpose was exactly the opposite - to manipulate the market.

Anyway . . .

osoab, thanks for the definitions. I didn't realize that the people shorting had borrowed the shares (or metal) and sold them without owning them. It really makes my head spin. So much fiction! Everything is imaginary.

To help my wee brain . . . I am thinking it's more like a land developer who sells houses before they are built - and before he's even purchased the land.

And Low_Five, I am really happy I am not the only one who didn't know. Thanks for asking!

[Filthy Keynes]

k-os, now you need to understand NAKED-SHORT-SELLING!

[osoab]

k-os, now you need to understand NAKED-SHORT-SELLING!


Naked Shorting (http://www.investopedia.com/terms/n/nakedshorting.asp)


Naked Shorting
What Does It Mean?
What Does Naked Shorting Mean?
The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen.

While no exact system of measurement exists, most point to the level of trades that fail to deliver from the seller to the buyer within the mandatory three-day stock settlement period as evidence of naked shorting. Naked shorts may represent a major portion of these failed trades.
Investopedia Says
Investopedia explains Naked Shorting
Naked shorting is illegal because it allows manipulators a chance to force stock prices down without regard for normal stock supply/demand patterns.

In 2007, the Securities and Exchange Commission (SEC) amended Regulation SHO to further limit possibilities for naked shorting by removing loopholes that existed for some broker/dealers. Regulation SHO requires lists to be published that track stocks with unusually high trends in "fail to deliver" shares. Some analysts point to the fact that naked shorting, albeit inadvertently, may help markets stay in balance by allowing the negative sentiment to be reflected in certain stocks' prices.

[k-os]

OK, using the land developer example:

The land developer sold houses on land that he has not yet purchased, and the land exists in the middle of the ocean.

I am not a fan.

[Low_five]

I just cant understand paper at all. I think that is why i like gold and silver so much.

so.. short selling is... I borrow a hammer from you, sell it to bob for 10 dollars, hoping I can go down to the store and get a new one for 5 and give it back to you? so Im hoping the price goes down?

and naked is.. I say I have a hammer to sell you? and you buy it from me for ten dollars and Im supposed to give it to you in a month, so I am reallllly hoping prices go down so I can run down to the store and get it for 5 and give it to you?


whats a margin call?

[DMac]

I just cant understand paper at all. I think that is why i like gold and silver so much.

so.. short selling is... I borrow a hammer from you, sell it to bob for 10 dollars, hoping I can go down to the store and get a new one for 5 and give it back to you? so Im hoping the price goes down?

and naked is.. I say I have a hammer to sell you? and you buy it from me for ten dollars and Im supposed to give it to you in a month, so I am reallllly hoping prices go down so I can run down to the store and get it for 5 and give it to you?


whats a margin call?


Right on the first part. For the second, clearing up naked shorting, think of it as you pretending to borrow 10 hammers from your friend to sell, even though he only has 1. You take the make believe 10 hammers and basically sell a coupon for each one, even though your friend only has 1 hammer.

The price of hammers will go down with you selling so many hammer certificates. Even though there is only 1 actual hammer to be sold. Hence the name, naked short selling. It's make believe selling, illegal and routinely practiced in the silver market as a tool to suppress price.

Margin Call: (http://www.investopedia.com/terms/m/margincall.asp)
What Does Margin Call Mean?
A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when a you account value depresses to a value calculated by the broker's particular formula.

This is sometimes called a "fed call" or "maintenance call".


Investopedia explains Margin Call
You would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.

So using the hammer sales example, the margin call would be when the friend that loaned you the hammer asks you to increase the deposit you gave him when he passed over the hammer to be sold, as the overall value of the hammer has gone down.

(I hope my attempt at explaining this was correct!) ;D

[po14015]

Must watch if you want to understand Naked Shorting:

Dark Side of the Looking Glass
http://www.youtube.com/watch?v=gpWzOjB8qtU

Here is the small amount of MSM play on naked shorting:

Bloomberg Special on Naked Short Selling called Phantom Shares
http://video.google.com/videoplay?docid=4490541725797746038&ei=ID-4StSTK5zcqgKR6N2AAg&q=bloomberg+naked+shorts&hl=en#

[FunnyMoney]

Thanks to all for providing the explanations and analogies regarding short and naked short selling - I got great laughs out of them. ;D

The only problem, the sad part actually, is that they're true. (naked shorting is basically fraud or stealing) :o