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Phantom shares drive AG and AU Down!

July 5, 2013

Today’s computer markets allow Trading Desks (probably select Central Banks and their Proxies) to drive gold and silver ‘prices’ down artificially. For the past two years the ‘prices’ of silver and gold have been held within a downward range ($1200 – $1600 for AU). This downward range than suppresses demand and creates a negative psychology for these metals. The culprit is the concept of ‘naked shorts’ which allow traders to short silver/gold contracts without any actual physical being exchanged. Our digital markets now allow this strategy where millions of phantom shares are often traded (these are imaginary shares). These shares then drive ‘prices’ down which implies that gold and silver has lost its luster.

The ‘naked short’ strategy (which can be executed via an algorithm) involves phantom shares which enter the market and act as if they are legitimate shares (based on the exchange of physical gold/silver). This strategy drives the ‘price’ of AG and/or AU down and creates a momentum which accelerates the downward trend among active real-time traders.

The two financial experts who have identified this strategy as the culprit for controlling AG and AU prices are Paul Craig Roberts, economist and Max Keiser, ex-trader and now media personality with RT (Russia Today media). This video, by Max Keiser, reveals how a trading algorithm can affect the markets:  ( Trading algorithms can execute these ‘naked shorts, in real-time and within milliseconds. The normal ‘covered short’ where shares are borrowed on margin is not our culprit. The ‘naked short’ involves phantom shares which trade against the existing shares and drive the ‘price’ down. This is our real culprit today!

A normal covered short sale involves the borrowing of existing shares from the market of existing shares. This strategy does not involve ‘phantom’ shares entering the market. This strategy is not our culprit. 

So can this strategy (naked short selling) continue to bracket the ‘prices’ of AG and AU indefinitely? I would suggest, yes…IF these actions are being implemented by a Central Bank and/or their Proxy (say J.P. Morgan Chase or similar). With unlimited access to near zero rate dollars, a trading desk (like J.P. Morgan Chase or similar) could continue to drive these prices down whenever they reach unacceptable levels. The concept of unacceptable levels would be within the mind’s of these manipulators. It makes sense that our Central Banks desire for traders and the public to accept the new digital currencies which are now creating some 96% of all monetary transactions. The old paradigm of gold and silver as ‘money’ must be eliminated so that this NEW PARADIGM of digitization becomes ubiquitous.

Money units are now 96% in the form of electronic digits. Gold and Silver are viewed by our Central Banks and almost all Keynesians as a barbarous relic which needs to be eliminated from our psychology.

Paper money now represents some 3-4% of all money in circulation. Digital money represents 96-97%. Gold and Silver represents a fraction of 1%. This means that gold and silver need to be eliminated from the mass psychology of traders, investors, savers, and the general public. Central Banks desire that electronic money emerge globally and ubiquitously.

Digital money units emerge from our banking system and their policies. These units are virtual and immaterial. They derive from the Consciousness of select policymakers within a Central Bank. QE (quantitative easing and/or official counterfeiting) is an example.

The mindset of our Founding Fathers (where silver and gold were money) must be eliminated if the Digital dollar and similar units are to prevail and grow. The process of changing the Gold Bug into a Digital follower is a gradual process. Will our Central Authorities prevail in this endeavour? Confidence is the game we are playing! If ‘confidence’ in traditional money units (gold/silver) can be destroyed, then our Keynesian policymakers can WIN this battle for money. Watch the markets for continuing efforts to suppress the ‘prices’ of gold and silver (by official authorities) and the counter efforts of Gold Bugs to restore faith in these precious metals going forward.

Traditional money has been gold and silver and or paper notes backed by gold and/or silver. The battle for the minds of traders, investors, savers, and the general public is on going and psychological. Who will win this ‘confidence’ GAME?

Keep watching the markets and watch the battle between the two forces that ‘see’ money differently. This battle has been on going since 1971, when Richard Nixon closed the gold window and allowed the emergence of fiat (now digital) money. Can the strategy of ‘naked shorts’ continue to play a key role in suppressing the prices of AU and AG? Personally, I don’t know the answer! I am:

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