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Short Selling
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Thread: Short Selling

  1. #1

    Default Short Selling

    Am I correct in thinking that the recent moves in the US and UK to ban short-selling apply only to financial stocks, and not to precious metals or other commodities?

  2. #2
    Join Date
    Sep 2008
    Posts
    542

    Default

    That's how I took it. They don't want Gold/Silver to sky rocket. Just the paper money institutions.

  3. #3
    Join Date
    Jun 2008
    Location
    Bay Area, CA
    Posts
    1,373

    Default

    No...I believe it is a blanket order. Naked shorting for a PM fund is no different than the naked shorting of a financial fund. The only difference is what the paper reads. Naked is, as naked does.

  4. #4

    Default Confusion

    After that last reply, there now remain two questions rather than one.

    1. Does the shortselling ban apply to PM or not?
    2. Is the ban only on Naked short selling, not on short-selling in general?

  5. #5
    Join Date
    Mar 2008
    Posts
    1,760

    Default

    Based on Friday's gold and silver charts, I'm going to agree with Balou.

    I saw absolutely no sign of the big short (straight down) activity in either chart, and I watched it like a hawk. The SEC put the ban in place and the SEC is also mandated to watch the commodities market as much as over-the-counter stocks. Based on todays action, it looks like the ban effected PMs too.

  6. #6

    Default Looks that way

    Yeah, I noticed that, although generally the silver price has dipped every time the market has rallied with another "Everything Will Be O.K." announcement, it seems to be rising today, perhaps reflecting the fact that many do not believe in fiat salvation...

  7. #7
    Join Date
    Mar 2008
    Posts
    1,760

    Default

    And it was a slow, STEADY rise with no wild fluctuations. That's the best sign I've seen in months that the shorts have fled the scene. And I was certainly gratified to see that nice gain of 69 cents. It wasn't earth-shaking compared to what happened a couple of days ago, but still, it was a good gain.

    And halleluia! The London market banned shorts too. I was really afraid that if the short sellers couldn't play their game here, they'd move over to the London market. This ban pretty much went into effect on all the world's major exchanges. So you can count on it, the Bank of International Settlements is issuing orders around the world.
    Last edited by Kelly; 20th September 2008 at 04:38.

  8. #8
    digger Guest

    Default

    According to news articles the ban only applies to 799stocks.

    http://online.wsj.com/article/SB1221...googlenews_wsj
    http://www.startribune.com/business/28676594.html?elr=KArksLckD8EQDUoaEyqyP4OW3ckUiD3aPc:_Yyc:aUnciaec8O7EyUsX

    The SEC temporarily banned naked shorting of 19 financial companies in July. On Wednesday, it restricted the practice but did not ban it outright. Some money managers have called for the SEC to prohibit naked shorting.

    http://www.baltimoresun.com/business...,3791055.story
    Last edited by digger; 20th September 2008 at 09:04. Reason: more info

  9. #9

    Default

    [quote=digger;11909]According to news articles the ban only applies to 799stocks.

    e/SB122181688114256411.html?mod=googlenews_wsj
    http://www.startribune.com/business/28676594.html?elr=KArksLckD8EQDUoaEyqyP4OW3ckUiD3aPc:_Yyc:aUnciaec8O7EyUsX

    That article has this classic paragraph:

    "But experts say short-selling is a useful market tool that allows investors to sniff out trouble and keep overly optimistic companies in check. For example, short-sellers were among the first to uncover problems at Enron and WorldCom. "If you outlaw short-selling, people with bad information [about a stock but who don't own it] have no way to vote," Meschke said."


    Imagine the unfairness of, for instance, knowing in advance about 911 and having no way to vote against American Airlines. The bog mindles.....

  10. #10
    Join Date
    Mar 2008
    Posts
    1,760

    Default

    Good for you for bringing that up! By the way folks, all the short selling that went on a couple of days before 9-11 led straight back to Deutch Bank and Israel. Funny how everybody in DC worked so very hard to cover that up...

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