The term naked shorting refers to a process whereby someone who is selling an item (asset) does not in fact own or know that he will be able to buy it. He or she hopes to purchase the item, in the future, at a price lower than it is today. Hence the term naked shorting. Naked shorting is very different than short selling conventionally because when one sells short an item, he has first borrowed it or knows it can be borrowed before he sells it. In naked shorting he is no longer bound by the physical assets that he owns. In the instance of gold or silver, they are traded by the ounce. There are physical ounces and paper ounces that are traded. (The paper ounces that are traded are also called ETF’s.) The paper ounces are not necessarily backed by the physical ounces.
It is because of this practice, that the big banks are able to manipulate the gold and silver markets. According to Zero Hedge, for each ounce of physical gold available, over 293 ounces of paper gold are traded each day. When we look at the silver markets, according to Bix Weir “with 14.4 B paper ounces of silver traded in the month of May you can compare that to how many physical ounces were available in that month in the Comex warehouses which averaged around 30M ounces or a ratio of 480 to 1.”