steve123

DZZ: How To Short Gold by Going Long

So like the financial crisis caused by selling naked shorts, Gold is in the same situation? In the financial crisis a short run on banks reduced the asset value of banks' in house stock holdings at the same time that their mortgage backed securities were loosing asset value. Thus marked to market they would face insolvency. Naked short selling helped to create a panic situation allowing the shorts to cover lower during the panic selloff. Now these gold shorting banks are attempting to induce a panic sell off to cover their shorts lower by buying the panic dumping of the paper gold as the price goes lower.
It would seem to me that the real producers of gold would be aware of this shortage and be reluctant to hedge, selling real gold contracts, at these lower prices. It would seem the banks would have to buy the paper contracts to cover their butts and drive prices up as demand returns to the paper gold arena to the point at which the real gold producers are willing to sell real gold futures. I don't see how they can possibly force gold lower with heavy real demand. It would require real gold producers willing to sell at lower prices than what demand is dictating. I understand how the paper short sellers created the paper gold over load, allowed to occur in the same way that naked shorting has been allowed in stocks. But what I don't undertstand is how they are going to escape the demand situation. The stock situation created a panic sell off allowing the naked short sellers to cover. There was no real demand in that situation. But with gold, there is real demand. I don't understand how they can escape real demand. Won't they have to pay the piper?