If you Naked Short and Don't Cover YOU GOT JAIL FOR LIFE: Also, Trump has No Power over Silver Price Discovery

Trump Can't Change Silver's Timeless Value Amidst Economic Chaos.

Listen up, starry-eyed dreamers. No one’s political darling can't bend the iron laws of precious metals any more than a politician (Trump, Biden, Clinton, Obama, Lincoln, Reagan, Eisenhower, Nixon, Kennedy, Etc) can command the tides.

Silver and gold have outlasted empires, wars, and calamities for millennia, unfazed by the fleeting whims of temporary power brokers.

While Washington's money printers go brrr to service a mind-boggling $36 trillion debt, silver's fundamentals remain unshakeable.

Demand soars as supply dwindles in a market more rigged than a carnival game. But sure, keep fantasizing that this administration will somehow rewrite 5,000 years of monetary history.

Newsflash: Silver doesn't give a damn about anyone’s political allegiances or social media crusades. It'll be here long after your hero Trump is just another dusty page in history books.

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Meanwhile across the pond (a couple of ponds)

It appears that implementing a temporary short selling ban is a possibility that President-elect Trump may consider.

But he is being pulled in two directions. He may have to repay industrialists like Musk or he may advocate for sound money to save the US economy. Most likely he will dance to two fiddlers but gold backed US treasuries do send gold north of 10,000 per ounce.

Background on Short Selling Bans

Short selling bans have been used in times of financial instability to temporarily limit trading activity.

In 2008, the U.S. Securities and Exchange Commission (SEC) imposed an emergency ban on short-selling of financial stocks in an attempt to boost investor confidence during the market crisis.

Trump's Recent Statements

President-elect Trump has recently:

• Vowed not to sell his stake in Trump Media, the parent company of Truth Social

• Called for an investigation into "market manipulators or short sellers"

These statements suggest Trump may be considering action against short sellers, potentially including a temporary ban.

Potential Motivations

Trump's interest in short selling regulations may be driven by:

1. Personal financial interests: Trump Media's stock price increased by nearly 16% after his statements.

2. Shareholder pressure: Some Trump Media shareholders have expressed optimism about Trump's potential to investigate and stop "naked short sellers"

3. Existing complaints: Earlier this year, Trump Media's CEO called for Nasdaq to investigate potential stock price manipulation by short sellers

4. Devin Nunes, CEO of TMTG, accused Citadel Securities and other firms of potential market manipulation through naked short selling in a letter to Nasdaq

Possible Impacts of a Short Selling Ban

If implemented, a short selling ban could have several effects:

• Temporary price effects: Research shows that short sale bans can have a temporary price effect that gradually dissipates.

• Liquidity changes: A ban could improve liquidity for some stocks while reducing it for others, depending on their characteristics.

• Market stability: Proponents argue bans can prevent predatory trading, while critics suggest they can exacerbate market instability.

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Precedents and Considerations

• South Korea recently banned all short selling to investigate naked short selling and market manipulation.

• Previous short selling bans in the U.S. (2008) and EU (2011) had mixed results, with some unintended consequences.

• Any decision to implement a ban would likely involve consultation with the SEC and other financial regulators.

While it's unclear whether Trump will actually pursue a short selling ban, his recent statements and personal financial interests suggest it's a possibility he may consider as he prepares to take office.

What about Silver?

In the shadowy world of precious metals trading, a battle rages between physical reality and paper illusion. Nowhere is this more evident than in the silver market, where allegations of manipulation and price suppression have long swirled. At the heart of this controversy lies the practice of naked short selling and its impact on silver prices.

Naked short selling occurs when traders sell silver futures contracts without first borrowing the metal or ensuring it can be borrowed. This creates an artificial supply of "paper silver" that can drive down prices, even when physical demand remains strong. The discrepancy between paper and physical markets is stark: on the COMEX, the paper-to-physical ratio for silver can reach as high as 500:1, meaning for every ounce of physical silver, there are 500 ounces worth of paper contracts.

This imbalance stands in sharp contrast to markets like the Shanghai Gold Exchange, which deals primarily in physical metal. There, what you see is what you get – real silver changing hands, not paper promises.

Silver stackers know that major banks exploit this paper game to manipulate silver prices. By flooding the market with paper contracts, they can create the illusion of a sell-off, even when physical demand is robust. This tactic allows them to profit from short positions while keeping silver prices artificially low.

The stakes in this game are enormous. Banks like JPMorgan Chase and Bank of America reportedly hold massive short positions in silver. If prices were to rise significantly, these institutions could face catastrophic losses as they scramble to cover their positions at higher prices.

This dynamic came to a head in early 2021 when retail investors, inspired by the Reddit’s GameStop saga, attempted to orchestrate a "silver squeeze."

The goal was to force a short squeeze by driving up demand for physical silver and exposing the paper market's vulnerabilities. While silver prices briefly spiked, the squeeze ultimately fizzled.

Why? Because unlike stocks, commodities like silver have above-ground supplies and complex industrial uses.

The Silver Academy was one of the first to layout his thesis and report the issue in his research on how industrialists can use their banking connections to ensure cheap factory inputs,

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”Take the poster child Elon Musk as an example of the typical industrialist. Industrial giants in aerospace, automotive, military and solar sectors always have significant influence on bank boards. These companies and sectors benefit from low silver prices as a key input, much like a daily hamburger eater would prefer cheap beef. They may leverage their connections to subtly encourage policies and practices that keep silver prices suppressed, maximizing their profits while potentially disadvantaging silver producers and investors. But in these tugs of war the will of the villagers prevail over these short term paper schemes” - Jon Forrest Little

This makes cornering the market far more challenging. Additionally, the paper-heavy nature of silver trading allows for rapid price adjustments without necessarily moving physical metal.

Nevertheless, the episode highlighted the deep-seated concerns about silver market integrity. Silver stackers argue that current regulations are insufficient to prevent manipulation, allowing powerful players to distort prices and undermine the true value of this precious metal.

As scrutiny intensifies, calls for reform grow louder. Proposals range from stricter limits on paper contracts to increased transparency in trading practices. Some even advocate for a return to a more physical-based market, similar to Shanghai's model.

The silver saga serves as a stark reminder of the complex interplay between financial markets and real-world commodities. As long as paper contracts dominate trading, questions will persist about whether silver's true value is being reflected in its price.

For investors and industry players alike, navigating this landscape requires a keen understanding of both the physical and paper realities shaping the silver market.

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The views expressed on TheSilverIndustry.substack.com are not necessarily those of the Silver Academy.